SolarCity launches plan to bring solar power to small and midsize firms
SolarCity Corp. wants to deck the rooftops of small and midsize businesses with solar panels by offering a new financing strategy to a market that the company says has largely gone untapped.
Companies that lease the solar panels from SolarCity would be able to save 5% to 25% compared with their current electric bills, said Chief Executive Lyndon Rive, who plans to announce the San Mateo, Calif., company’s latest effort Tuesday.
Businesses with potential for solar arrays of less than 500 kilowatts made up less than 40% of commercial solar installations in the first quarter of 2015. Solar arrays under 100 kilowatts were less than 10% of commercial installations.
SolarCity’s target is businesses that would use small solar arrays ranging from 30-kilowatt systems that a mom-and-pop store would use to a 500-kilowatt system designed for a warehouse or storage facility. The company plans to make the leasing plan available to businesses first in California and then expand in the next year.
“No solar company has successfully addressed this market on a large scale,” Rive said. “Why don’t these companies have solar on those roofs? There’s no product available to them.”
The trouble, Rive said, is that it generally has cost too much to develop and install a solar array on the roofs of small businesses. The solar companies had to spend time customizing the system, which created design costs and legal fees. And with installation of the panels farmed out to subcontractors, the deal never made economic sense.
“It’s the same work to get a 1,000-kilowatt system as a 50-kilowatt system,” Rive said. “The work proportional to the profit doesn’t make sense.”
Sean Gallagher, vice president for state affairs for the Solar Energy Industries Assn., said that small businesses have had difficulty obtaining financing for solar projects because their creditworthiness can be difficult to assess. And when the state cuts incentives, small businesses often lack the resources to pursue solar.
“Companies that solve these issues effectively face a large and growing demand, which has often been stymied to date and is poised to take off,” Gallagher said.
SolarCity expects to keep costs down by using the company’s own installers and employing a simple panel design that has reduced installation to as little as two days from two to three weeks. SolarCity also will tap Property Assessed Clean Energy financing programs, which attach the solar lease agreement to the property where the panels are installed and allow repayment of upfront costs over 20 years as part of the property tax bill.
“None of this stuff is totally revolutionary on its own,” said Shayle Kann, senior vice president of research at GTM Research, a Boston-based clean energy consulting firm. “It’s a brand-new initiative so we don’t know if it’s going to really take off.”
SolarCity has plenty of name recognition — its chairman is billionaire Los Angeles entrepreneur Elon Musk, Rive’s cousin — but it has endured net losses since its founding a decade ago as it has expanded to become the nation’s leader in rooftop solar installations.
Its stock price is down more than 30% from its high of $79.40 for the last year, but last week the stock was upgraded to “outperform” by Baird Equity Research, which cited the company’s recent success at cutting costs and expanding operations. SolarCity shares rose 7 cents Monday to $54.69.
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