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Brainchild of uber entrepreneur and superhero Elon Musk, SolarCity installs and finances commercial and residential solar energy systems. Founded in 2006, SCTY IPO’d late last year at $8 per share and currently trades at a little over $23. Investors (and taxpayers!) are STILL being burned by long running clean energy debacles – most notably Solyndra - so why am I, and judging by the $1.75 billion valuation, many others, a huge fan of this company?

SCTY benefits from advancing technology – Solar power tech is advancing so quickly now that even Chinese producers are going out of business; this is the principle reason why Solyndra no longer exists. SolarCity, however, benefits from any new developments, as lower prices only expand market potential.

SCTY doesn’t charge anything upfront – Panels are installed for free, and then electricity is sold to homeowners at a lower rate than the major utilities.

SCTY has fantastic business partnerships – Installations are marketed through Home Depot stores, discounts are offered to Honda owners, and Google, Bank of America, and Merrill Lynch back the Power Purchase Agreements.

The common argument I hear from finance professionals is that solar would not be competitive without subsidies, and they’re still right... In some places.

Deutsche Bank recently reported that solar energy has hit grid parity in India and Italy, with some American States close behind. Articles in Scientific American and The Economist show that solar follows a Moore’s Law type growth curve.

All signs point to solar energy becoming, to quote Mr. Musk, the “plurality of power” in the next 10 years. I think with their innovative financing plans, strong industry partnerships, and brilliant business model, SolarCity is well positioned to be the long-term leader in this fast growing industry.

Anyone disagree?

Comments (12)

  • rickyross's picture

    Elon is my idol. That is all.

    People tend to think life is a race with other people. They don't realize that every moment they spend sprinting towards the finish line is a moment they lose permanently, and a moment closer to their death.

  • ytinifni's picture

    I've made a very good return investing in it already. It's a leader in a sector with huge potential for growth - definitely a long term investment for me.

    You need to understand that a good firm, a profitable firm, and an attractive stock investment can be 3 unrelated things. -Epicurean Dealmaker

  • DBCooper's picture

    Huge fan of Elon. I wonder what all the WSO TSLA bears have to say.

    Please don't quote Patrick Bateman.

  • UtilitiesBanker's picture

    Look at what happened at Germany, Spain with regulatory risk. Specially with renewable generation companies where tariff deficit have arousen due to the subsidies..All of these countries have suffered regulations that have cut back the payment scheme of these tipe of energy...

    In regards of these company seems more than a builder so not to be directly affected if this scenario turns out to be the one.

  • PrinceAlbert's picture

    Elon is seriously one of my favourite people in the world. Have had some money in TSLA for a while and is looking good at the moment. If and when SpaceX IPOs I'll jump straight in.

    Having said that I always got the feeling that SolarCity was almost secondary to him in terms of importance behind the first two. Doesn't seem to have affected SolaryCity's performance as of late though ...

  • trazer985's picture

    my biggest issue with solar/anything in the energy sector, is that when they crack the more advanced fusion techniques, it'll make energy near worthless. I like this idea on the short term, but i wonder how much they lose when cold fusion comes out, which it will purely from the defence research on it, let alone the energy companies.

    It's a nice gamble, and you're saying its great with hindsight, which is wonderful. If a new solar panel comes out that drives costs down significantly, i'll buy it off the shelf at homebase and get them to install it, and my energy is free.

    Their margin is from the significant sunk cost in investing in panels on a large scale.

  • In reply to trazer985
    Opimum's picture

    trazer985 wrote:

    my biggest issue with solar/anything in the energy sector, is that when they crack the more advanced fusion techniques, it'll make energy near worthless. I like this idea on the short term, but i wonder how much they lose when cold fusion comes out, which it will purely from the defence research on it, let alone the energy companies.

    I don't think energy companies are carrying out any research into fusion at the moment. The military pours money in to letting physicists have a crack but we're still decades away, if not more. I've been lectured by the CEO of Joint European Torus and even he feels that viable fusion is at least 50 years away. I guess that is still fairly short term, but not really from an investing viewpoint. Plus they've been saying that it's going to be ready in 50 years for at least 70 years now. And this is normal fusion, I haven't heard anything to suggest cold fusion is even near viability in any way at all. If it is even physical.

  • RonaldReagan's picture

    I've never been a fan of solar energy. Solar and pharma are two of the stocks I tend to stay away from, as well as a majority of technology startups. I am, however, looking into some of the companies that produce the solar panels and parts for the panels since they do more than just solar to add some diversification in case a solar company goes under, which is always a possibility. I prefer nat gas. Even though I think the price is high right now, I think that it's a good compromise between the drill baby drill mindset and the occupy mindset.

    -RR