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The solar industry has been marked by a number of failures
and successes over the years. Today, the saturated market of cheap,
silicon-based solar panels is making it difficult for many established solar-panel
manufacturers to turn a profit. This includes companies from China who were the
main force behind the 50% price drop last year.
SolarCity is not
falling to this trend. Instead of declaring bankruptcy or going out of
business, the company has filed the paperwork for an IPO. But how is this
possible amongst such stiff competition?
A Different Approach
At a glance, it may seem like selling solar panels is the
primary money-maker for the solar industry. But by-and-large, the panels themselves
make up only a portion of the total system cost (only about 20% for small
residential setups). The rest of it is hardware and installation costs needed to
setup the system and hook it to the grid.

11.09 kW home system
in Portola Valley, CA. (Credit: SolarCity)
SolarCity capitalizes on this part of the market. The
company designs, installs, and maintains complete solar-energy systems used in
residential and some commercial applications. But instead of selling the panels
and system, they lease them to their customers. This provides incentives for
many who are hesitant or unable to drop a sizable down payment into solar
power. The savings from surplus paybacks and reduced grid usage generally are
enough for homeowners to save, even after making the lease payment.
SolarCity also guarantees the performance of its systems,
ensuring that its customers will save money. The company can do this because it
takes full responsibility for the design and upkeep of the systems, and uses
data from similar installations to predict how new installations will perform.
Will Success Fade
With Fading Subsidies?
Though SolarCity is currently the largest residential
solar-power installer, it still has an uncertain future. The company is no
stranger to state and federal subsidies that have aided and supported the
growth of the solar industry. But as these subsidies
fall and fade in the loom of government spending cuts, many question
whether companies like this will be able to stand up on their own.

(Credit: Solar Feeds-->)
I'd like to think that SolarCity will survive, even if it
loses its fair share of government support. The residential sector of the solar
market is continuing to grow as home energy usage climbs and people become more
eager for the benefits of solar and other sustainable home energy systems. And
since homes account for at least 22%
of total U.S. energy consumption (according to the Energy Information
Administration), there is a lot of room for competition between power plants and
companies like SolarCity, and thus a lot of room for sustainable power to
displace traditional energy sources.
References
EIA - Total
Energy Flow, 2010
NEED -
Energy Consumption (pdf)
Technology
Review - Why SolarCity Is Succeeding in a Difficult Solar Industry
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