Lyndon Rive, founder and CEO of SolarCity Corp., was at the company's brand new Rocky Hill office just after 4 p.m. Thursday when Ed Steins, his Northeast regional vice president, read aloud the closing price of the company's shares on its first day of trading.
It had been a roller-coaster week for SolarCity, the San Mateo, Cal. company whose chairman and largest shareholder is the tech industry visionary Elon Musk. The company had hoped to bring out its shares at $13 to $15, but investors balked and beat the price down to $8 — costing SolarCity tens of millions of dollars.
Then on Thursday, Rive rang the opening bell at the Nasdaq and the share price rocketed to $12.70 by early afternoon. It would be ironic if it closed at $13, Rive mused, as he talked with me about SolarCity's unique business model, around a conference table made of solar panels.
A few feet away in the main warehouse and work area, the 45 employees and guests were celebrating the opening of the company's 15,000-square-foot facility, which is adding 15 more people. Among the recent hires was Bill Calise of North Stonington, a former construction worker with two children and a disabled wife, who was unemployed for the last year — except for some part-time work.
"I sold my tools, scrapped some metal, did odd jobs, raked leaves," said Calise, a newly minted solar installer who said he was not eligible for unemployment benefits before SolarCity hired him.
"It's been a tough two years," said Calise, wearing a green SolarCity sweat shirt and matching hat, like dozens of his fellow workers. "This is great."
Inside the conference room, Steins read the closing price on his device: "$11.79."
"That's still good," said Rive, 35, who is Musk's cousin and a tech entrepreneur on his own right. "It's a fair thing. I still think it's a steal at that price."
For him, the 47 percent increase from the $8 opening meant an added $15.7 million in the value of his holdings in the company.
For Calise, it signaled confidence in the company that has offered him a livelihood.
For the state of Connecticut, SolarCity is the largest of about 100 firms in a burgeoning solar power industry, which is key to the state's energy future — lower-cost power, a significant part of which must come from renewable sources. Connecticut is one of 14 states where the company has decided to deliver fully expanded operations.
"The ability to build out this technology," Gov. Dannel P. Malloy had said in a brief ceremony an hour earlier, "is going to be very important for our ability to compete."
In the quest for cheaper, cleaner energy, Malloy added, "SolarCity fits into that equation very well."
But skies are anything but clear for an industry trying to make solar energy an economically viable alternative for the masses. It's still far from profitable and it doesn't happen without subsidies — incentives, they prefer to call it — from the state and federal government.
For now, the state payment amounts to a hefty 30 cents per kilowatt hour for the first six years, for residential installations. Eventually, that incentive will disappear in favor of financing help, then nothing at all. But the industry must build up critical mass first.
For commercial buildings, Connecticut Light & Power and United Illuminating recently held "zero emission renewable energy" reverse auctions under a system set up by the state. Firms with a total of 360 individual projects, mostly solar, bid for the right to sell electricity to the power companies through long-term contracts. The winning bids, the cheapest offers, averaged 9 cents per kilowatt hour over the market rate.
That means ratepayers will subsidize alternative power for a few years in the hope that it will mean lower costs later. It's already driving down overall prices in the industry, said Dan Esty, commissioner of the state Department of Energy and Environmental Protection.
The average subsidy in all states is about twice what Connecticut ratepayers will pony up as a result of the recent auctions, Esty said. "Are we where we need to be over time? No, but we had a better-than-we-thought year, a spectacular year."
Even with various forms of public subsidies, er, incentives, SolarCity is still losing large sums. Through nine months of 2012, the company logged a net loss of $78 million on total revenue of $103 million. That's deeper than a $57 million net loss in the first nine months of 2011.
But installation sales are up sharply to $70 million, from $22 million, following a pattern of more than 100 percent per year growth for the 6-year-old company, Rive said.
He explained that SolarCity is not just an installer, not just a financing firm, but a power company, which owns generation assets — on roofs, rather than in large plants. "To my knowledge we're the only company that is vertically integrated," Rive said.
Under the company's typical model, the host business or homeowner does not buy the solar power systems, but allows the company to use its rooftop in exchange for a guarantee of a contracted amount of kilowatt-hours over 20 years. The host then pays SolarCity for the energy, either in a lump sum up front, or in monthly bills, or some combination — at a deep discount to the grid rate.
Power not used by the customer goes back into the grid, and each month the customer pays CL&P or other utility for the net amount of kilowatt hours it drew off the grid.
It will take years for the model to make money, and SolarCity has raised $1.6 billion from investors who are financing the buildout, in addition to $200 million from equity investors and the IPO.
On the manufacturing side, the market is flooded with cheap solar materials made in China and other Asian nations. That's driving down the cost of solar installations — panel prices are nearly six times lower than they were in 2006, SolarCity said — but it has hurt companies such as Enfield-based Specialized Technology Resources, a solar materials-maker, and it has burned Wall Street investors who lump the whole industry together.
"The risk appetite just isn't there," Rive said, explaining why the IPO raised $85 million after expenses, rather than twice that much.
The IPO was made easier by Musk, the co-founder of PayPal and Tesla Motors, who now wants to send a person to Mars through his SpaceX venture. He bought another 1.9 million shares of SolarCity and owns 28 percent of the business.
It's a complex trail of money, for sure. But it means Bill Calise can wake up with dignity at 4 a.m. and do a job that supports his family and advances the state's energy goals.