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