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Solarcity Recipe for Solar Energy Success
From
Technology Review – After a steady stream of bankruptcies, poor earnings reports, and canceled IPOs for clean-energy companies, this week Solarcity bucked that trend by announcing that it had filed the necessary paperwork with the U.S. Securities and Exchange Commission for an IPO.
The key difference between Solarcity and many other clean-energy startups is that it isn't trying to take on incumbents with new technology. It makes money by deploying existing solar technology with a novel approach to financing.
Solarcity designs, installs, and maintains solar-energy systems fitted to homeowners' roofs. Instead of asking for a big upfront payment, it leases the systems. As the panels produce power, surplus electricity is sold back to the local utility. Combined with the savings that come from using less power from the grid, this will typically reduce the homeowner's electric bill by enough to offset the lease payments.
Aided in part by a rapid drop in solar-panel prices over the past few years, this approach has been a success. A market flooded with cheap solar panels from Asia saw prices drop by 50 percent last year. That has eliminated profits for many solar-panel manufacturers, forcing some, including a number in China, to declare bankruptcy or go out of business. But installing solar panels remains lucrative, and when solar prices drop, that helps Solarcity's bottom line.
A recent analysis by GTM Research suggests that SolarCity has been quickly increasing its market share, claiming 6 percent of the residential installation market in 2010; and 13 percent of the market in 2011, "more than double the next biggest player," says Shayle Kann, managing director for solar at GTM Research.
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