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Welcome to the Energy & Environment (E&E) Exchange, a blog dedicated to science and engineering topics that are (generally) related to energy and the environment. This blog is meant to encourage discussion about the challenges and possibilities surrounding sustainability through science and technology. The blog's owner, cheme_wordsmithy, is a former technical writer and engineering editor at IEEE GlobalSpec, the company that powers CR4.

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SolarCity’s Solar Market Success

Posted May 09, 2012 8:00 AM by cheme_wordsmithy

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

Technology Review - Why SolarCity Is Succeeding in a Difficult Solar Industry

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#1

Re: SolarCity’s Solar Market Success

05/11/2012 7:25 AM

"I'd like to think that SolarCity will survive"

Wishful thinking, or banking on the innumeracy and idiocy of Americans with bad social consciences, who can be suckered into such things as paying their local gas company extra money to buy "carbon offsets"? (As in Northern Virginia, where our bill just tells us that we are going to, whether we agree or not, and the Gas Company just tells us, when we complain/query/fight it, "Listen, this is the way it is, like it or not, you're going to pay").

Listen to the ads, then do the math. One square yard of Solar Panels to produce roughly 45 watts of power, on a clear day, with maximum Solar Energy delivery. this equates to less than one half the power to drive a "100-Watt" light bulb. Use LEDs and it DOES become a better number, but rotating motors (refrigerators, AC, water pumps, fans, etc.) do not offer similar efficiencies, and require MUCH more power.

How many square yards of roof does your property have, and how much energy is your light bill currently showing? Can your roof, or even ALL of your yard, supply enough solar energy to even dent your current power needs. And they tell you that you are going to SAVE money (in the long OR short run) on the technology they are selling you? Not likely. But, they might survive, unless

"it loses its fair share of government support" (Italics Mine)

Read this as Taxpayer's money, then ask yourself, if you ARE a Solar City customer, why you are paying them TWICE to get their service once. Then, having done that math, ask yourself, if you AREN'T a Solar City customer, why you should even pay them once? Free market economies work on the basis of "What does the customer need, or want?", and not on the basis of "What do I think the customer SHOULD need or want, and can I make the (erstwhile) customer pay me to provide it?"

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#2

Re: SolarCity’s Solar Market Success

08/01/2012 9:12 PM

As a person in the solar industry I always find it comical to read other posts regarding an industry or company an individual have no direct or indirect contact with. The guy that posted above me is really spreading false information based on poor assumptions. I work with customers every day to help them save money by using solar. It is impossible to generalize exactly how much people will save because everyone uses electricity differently and rebates change based on utility and demand. If your current electric bill is under $80/month then you probably wont save any money initially. But over time as electricity becomes more and more expensive... the people who go solar now will save TONS of money because they will have locked in their electricity rates at a lower price.

If you live in the Los Angeles area and are truly interested in seeing how solar city can help you save money on solar please check out my website. I do several free solar energy consultations daily.

http://www.losangelessolarguy.com

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In reply to #2

Re: SolarCity’s Solar Market Success

08/03/2012 3:32 AM

Please explain "poor assumptions". Don't attack ME. Attack my assumptions. Do so by making truth known, in technical detail. Nothing I've said above is in any way negated by the fact that you have a Solar business in LA, and do consultations daily. Innumerate people who have no more concept that you SAY I do will be misled by false claims (as I've already discussed above, so don't bother telling me to take my own advice). Unfortunately, they'll not know until it's too late, by whom they've been misled.

But, as a matter of fact, known to many here on CR4, I didn't fall off the turnip wagon yesterday, and I do, as a matter of fact, have solid background in physics, as well as a detailed knowledge of what currently available solar cells can do. Beside being a salesman, what do you know of the band gap limitations of currently available solar cells, vis-a-vis their ability to use energy efficiently, and the causes of their inherent losses? What do you know of the energy physics involved in conversion?

I not only know what a square yard of solar cell can produce from experimentation, but can explain why, in addition to being able to expound more that CR4 readers wish to know about the ability of the solar cell to use, or waste, impinging energy in specific wavelengths, or bands, and at specific temperatures (i.e., how solar cells' efficiency is affected by external cold or heat). I can discuss at length that issue of band-gap inefficiency and it's causes. Unfortunately, no commercially available solar cell can overcome those losses, yet.

And you're "locked in rates" as energy becomes more expensive smack of pie in the sky, let me sell you the future today, based on my predictions. Sell me what works today, not what MAY work, if all your predictions come true tomorrow.

Or will you come back and retrofit, for free, to existing customers, more efficient technology, as it becomes available? I think not.

So, I do know whereof I speak. If not, specify where I have spread untruth, or displayed ignorance.

But provide technical detail, with rationale. Salesmen, with sales pitches, neither impress nor frighten me.

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