Another Planned IPO in the Solar Industry: SolarCity Plans to Go Public
If the excitement surrounding the Facebook initial public offering were not enough, you may want to start thinking about lining up for the IPO for SolarCity. The company recently announced plans to go public, although details are scare about timing and share pricing. The IPO announcement comes on the heels of the second failed attempt to go public by another company-with a very different business model and technology.
The growth of SolarCity since its inception in 2006 is tied to its financing approach that allowed homeowners to put solar panels on their roofs without the large upfront cost. As reported in the Los Angeles Times, SolarCity "pioneered a leasing model that helped put previously unaffordable solar panels within reach for the average homeowner. "
T. Burke Pemberton in a blog posting tries to contrast the public filing of SolarCity with that of BrightSource Energy, which at the eleventh hour postponed its IPO. "[R]ecent developments like solar power-plant developer BrightSource Energy shelving its IPO, or full-service solar provider SolarCity announcing this week its plans to go public, has many industry stakeholders shrugging their shoulders as to what lies ahead for the future of the sector."
Pemberton argues that the drop in solar panel prices has helped SolarCity expand its business. If prices were to rise as expected as a result of a decision later this week to impose tariffs on Chinese modules, that could seriously hurt SolarCity's prospects and have the exact opposite result on BrightSource.
Huffingtonpost sat down with the CEO of SolarCity, Lyndon Rive, and characterized Rive's ambitions as "world domination." According to the posting, SolarCity's business model is to offer a range of options to their customers. "Customers can buy systems outright or pay zero down and lease or purchase the power the system produces." SolarCity receives investments from companies like Google that can benefit from the 30 percent investment tax credit.
In the interview, Rive confirmed that about half of SolarCity's installations use Chinese-manufactured solar panels, but that he was not concerned that an increase in the price of Chinese panels would affect SolarCity's operations. Huffingtonpost quoted Rive as saying: "It's more of an annoyance than a concern. It's a worldwide market... if China's costs go up, we'll just buy from somebody else."
But Pemberton on his blog sees clouds on the horizon. "Rising prices in the solar PV sector could bode well for BrightSource's business model, and could hurt SolarCity, creating questions-or possibly explaining the urgency-surrounding its decision to go public."