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SolarCity Files for IPO

Written by Nick Hodge
Posted October 10, 2012

The past few years have seen more than a few solar bankruptcies.

Solyndra is the most infamous one, closing its doors after gorging on public funds. Evergreen Solar and SpectraWatt also went belly-up. And the list certainly goes on...

But all these solar failures have a few things in common, and ignoring the lessons they teach can cost you big bucks in the energy game.

For starters, all of the solar bankruptcies were manufacturers of solar panels or cells.

As the price of solar panels has collapsed — down 50% over the last year — companies that bet on more expensive technologies or processes have failed.

Falling Solar Prices

They failed for the same reason you're not reading this on a Radio Shack or RCA computer: Other technologies are beating them out as the market matures.

The second thing you must understand is that the collapse of solar prices is actually good for an important part of the industry: consumers.

With a high supply of cheap panels, homeowners have been quick to snatch up deals...

Solar installations in the United States have grown 426% since 2010.

U.S. Solar Installed CapacityThe question is now: If prices are falling and installations are surging, who is making money?


Non-Solar Solar Companies

Installations are higher than they've ever been — but 75% of homeowners aren't buying the panels. They're leasing them.

New financing models are allowing installation companies to own, maintain, and insure the solar panels while homeowners pay a fixed rate for electricity over 20 years.

This new model has the sharks circling as Wall Street's biggest banks are racing to provide the upfront funds so they can get a cut of the 20-year action.

It's the reason California homeowners alone have put $1 billion into solar leases in the past five years.

And it's the reason solar installers — like SunRun, Sungevity, and SolarCity — are getting a new look from investors...

Check out some of the stats these guys are posting...

It took SunRun four years to get its first 10,000 customers. It took one year to get its next 10,000. Credit Suisse just bet $200 million on the company.

Sungevity increased its revenue from $2 million to $10 million in two years.

SolarCity has installed more than 30,000 systems in 14 states while employing 1,500 people, including installations for Wal-Mart and Intel. It was named #10 in Fast Company's list of the 50 Most Innovative Companies in the World this year.

Indeed, while makers of solar equipment have been imploding, installers have been exploding.

But you haven't been able to get a piece of this action... until now.

Earlier this week SolarCity filed plans to raise up to $201 million in an initial public offering (IPO), with Goldman Sachs, Credit Suisse, Bank of America, Needham, and Roth Capital — all in on the deal.

And I can assure they aren't doing so to lose money.

You may know of the company's chairman, Elon Musk, the brains behind such ventures as PayPal, SpaceX, and Tesla Motors (NASDAQ: TSLA).

SolarCity is part of a new sector I'm calling “non-solar solar stocks,” because they aren't part of dependent-on-government side of solar.

It plans to trade on the NASDAQ under the ticker SCTY. Until it does, though, there are other non-solar solar stocks that are surging...

And you can see how to get in on those right here.

Call it like you see it, 

Nick Hodge Signature

Nick Hodge
Editor, Energy and Capital

P.S. I'll be a part of the Energy Panel at this year's New Orleans Investment Conference. Rick Rule, Keith Schaefer, and Marin Katusa will be joining me on stage. To learn more, click here. 


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