SolarCity Announces Expansion in New York, Files for $200 Million IPO

Vince Font, Contributing Editor
October 09, 2012 | 6 Comments

Just days after announcing the launch of major expansions in New York state, the San Mateo-based solar company SolarCity has filed for an IPO in excess of $200 million. Having already received more than $1.5 billion in funding from a variety of high profile companies including Google, PG&E, and U.S. Bancorp, SolarCity is betting on the success of its business model to appeal to stock investors eager to snatch up a slice of the potentially lucrative solar pie.

The company’s business model is simple and effective, and has led SolarCity to rapdily become one of the most successful solar power providers in the country. Rather than requiring customers to pay the high costs associated with the purchase and installation of solar PV panels for their homes, SolarCity offers the option for residential customers to instead lease the electricity-generating technology for an affordable monthly fee. Since its launch in 2006, it has serviced over 33,000 buildings in 14 states, and as of June 30, it claimed to have 31,600 solar system customers. This number is expected to grow exponentially as the company continues its expansion efforts.

A statement issued by Robert M. Hallman, New York’s Secretary for Energy and Environment, cited the NY-Sun Initiative as the principal driving force behind SolarCity’s decision to expand in New York State. “We are dramatically increasing solar energy installations all across New York,” Hallman said. “[The] announcement by SolarCity shows that NY-Sun is not only good energy and environmental policy, it is also good for business and the economy of the State.”

The NY-Sun Initiative, which was announced in August by Governor Andrew M. Cuomo, will see the state investing $800 million in the next three years in rebates and grants to consumers and businesses that install PV solar systems on their homes and businesses. With these added incentives expected to generate increased interest in solar alternatives, SolarCity appears poised to take perfect advantage of the opportunity. In July, SolarCity opened an expanded operations center in Albany. With its announcement in early October for the opening of two new facilities in Westchester County and Long Island, SolarCity is effectively doubling down on the opportunity to corner the market on affordable solar power while simultaneously bringing jobs to the local economy.

Ed Steins, the Northeast Regional Vice President for SolarCity, said the company’s New York expansion accomplishes the task of killing two birds with one stone. “This expansion brings new jobs and cleaner power to New York,” Steins said. “Installers, electricians, construction managers and field sales are good local jobs that can’t be outsourced.”

Meanwhile, SolarCity’s intent to go public could result in wide-scale expansion and a hiring spree that might serve to dwarf the number of jobs created in New York state since its arrival there in 2011. The IPO offer is being underwritten by Goldman Sachs, Credit Suisse Securities and BofA Merrill Lynch. Plans are for the company to adopt the ticker symbol SCTY and list its stock on the Nasdaq Global Market.

Lead image: Solar panel installation via Shutterstock

6 Comments

Jay Lindberg
October 11, 2012

In New Jersey, their install cash price is in the $3.80 range and their 20 yeart prepid lease price is in the $1.20 a watt range.

While their install price is in the $2.45 cent range, that costdoes not enclude overhead or marketing costs.

Delroy Leslie
October 10, 2012

SolarCity actual installation cost might be less than $2.50 per watt, but for the ITC and MACRS they might price it at $5.00 per watt. With an inflated accounting cost, the ITC and MACRS will allow them to recover their investment in less than 3 years while earning revenue from the leases.

Jay Lindberg
October 10, 2012

I'm in the New Jersey Solar Industry. Recently I ran an analysis of the Solar city 20 year prepaid lease program. Solar City is bundling these and they are non-performing securities. That are dumping residential solar projects in the Jersey market at a loss. There are going to be some real problems with these IPOs in the future.

JSM @AltWatt
October 10, 2012

Solar City's turnkey zero-down solution is attractive for many would be solar users. Although it is good to see utilities offer competitive rate plans, I think it will be some time before the Solar City's of the world shrivel due to competition from Austin Power's. Regardless, the more solar options the better... Choice is good.

Gerry Wootton
October 10, 2012

I'm not sure how Austen Energy's arrangement is better. They currently pay 12.8 c/kWh +/- 2.6 c/kWh for distributed solar power while the peak TOU rate is 13.03 c / kWh base plus adders. They also charge a premium for the metering capacity in order to measure TOU and gross production. A consumer/producer would have to produce at least 120 kWh/month in excess of usage to just break even. Net metering attracts a smaller service charge while the consumer can defray power consumption at an average base rate of 10.5 c/kWh which, with adders, is more than the solar credit. This is a case where the back of the envelope using current base rates for consumer purchased power (not inflated rates that would actually be in place over the life of the system) plus adders and retail rate for solar credits gives a false impression. This is not a case where the customer's investment in a solar system reduces the utility's net revenue. The historically large variation in the 'value of solar' also adds a large amount of uncertainty to the yearly payback.
If a goal is to replace dirty power with clean power, then a system which calculates the 'value of solar' on a direct cost basis fails to accomplish this.

Wendy Towber
October 9, 2012

SolarCity's revenue model will be undercut and outdated as soon as more utilities like Austin Energy move from tradional net metering to more a more value based billing model where the utility decouples consumption from generation. Austin Energy's "Value of Solar rate" is a model that is more attractive to utilities whereby they keep their customers and their cash flow without yeilding either to a middleman like SolarCity.

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Vince Font

Vince Font is a professional freelance writer specializing in the fields of renewable energy, high tech, travel, and entertainment. Read his blog at www.vincefont.com or follow him on Twitter @vincefont.