Google puts more money in SolarCity

Solar City was founded in July 2006 by brothers Peter and CEO Lyndon Rive, based on a suggestion for a solar company concept from their cousin, Elon Musk, who is the chairman and helped start the company.

The company designs, finance and installs solar energy systems, performs energy efficiency audits and retrofits and builds charging stations for electric vehicles. SolarCity had more than 6312 employees as of December 2014.

SolrCity logo

SolarCity has grown in recent years to meet the rapidly growing installation of solar photovoltaic systems in the United States. The overall U.S market has grown from 440 MW of solar panels installed in 2009 to 3,300 megawatts in 2012, and it is expected to grow rapidly.

In October last year, SolarCity announced it would be offering up to $200 million in solar bonds to launch a new online website to buy the debt, the first registered public offering of such bonds in the United States.

«Corporations are starting to realize the importance of using clean energy», CEO Lyndon Rive said. Historically the companies that have financed solar deployment have been the big financial institutions, but now it seems to be a shift in the market were tech companies are getting into the market and helping to transform a dirty infrastructure to a clean infrastructure.

SolarCity partners with banks, large corporations and the asset-backed market to create project finance funds to finance its lease and PPA (Power Purchanse Agreement) options. SolarCity`s financing partners have included Bank of America, Merrill Lynch, Citi, Morgan Stanley, National Bank of Arizona and U.S Bancorp, among others.

Among SolarCity`s more well known financing partnership was a $280 million fund created with Google to finance residential solar installations in June 2011. The Google Fund was the largest fund of its kind in the U.S, and Google`s largest investment in clean energy.

I wrote about Apple in my recent article that it is spending $848 million on a massive solar farm to power its corporate offices and California stores. Google continues to invest in renewable energy and they announced today that they have invested $300 million in a $750 million SolarCity fund to finance residential solar projects.

This is Google`s second investment in SolarCity.

Renewable energy principal at Google, Siddharth Mundra said today; «We’re happy to support SolarCity’s mission to help families reduce their carbon footprint and energy costs. It`s good for the environment, good for families and also makes good business sense.»

Rive said their biggest competitor is the customer not doing anything with the clean energy and just sticking with the monopoly.

SolarCity installs the systems at no charge to customers and then charges the residents slightly less per month for the energy than they pay their traditional utility, and their new fund will be used to cover the cost of installing solar systems on homes in 15 states in the U.S.

Solar panels are still a niche product, but the cost of solar rooftop systems has been plummeting in recent years. Take a look at the chart below:


In their newly report they said that they have reduced installation costs from $2,19 per watt to $2,09. Its net loss of $1,47 per share was a little bit wider that the estimates of $1,27. Q1 EPS loss forecast for a net loss of $1,75 to $1,65 was worse than current expectations. They added a grand total of $3 billion in future contract payments throughout the entirety of 2014.

The stock is down -38,7% last 12 month, but only 1,5% so far in 2015. The 5 billion valuation company traded down -0,34% today. The short interest have been massive since March 2013. From two to twenty million, but seems like it peaked at the end of last year.

Solar power is growing fast and the older energy companies are trying to stop it, and many utilities are now pushing for reforms that would slow the breakneck growth of rooftop solar. American Legislative Exchenge Council are pushing to get rid of solar subsidies.

A study from Lawrence Berkeley National Laboratory argues that this solar business could soon put utilities in dire straits. If rooftop solar were to grab 10 percent of the market over the next decade, utility earnings could decline as much as 41 percent.

You can quick and easy replace a taxi driver with a robot, but I assume it will be difficult to set in a robot instead of a human to install a solar panel.

This sector can push the unemployment rate further down if the demand for the solar panels goes up.


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