SolarCity: A Bright Future Indeed
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 runningdebacles – 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,, and 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.