The forecast is looking sunny for SolarCity in the stock market. Despite a slightly cloudier Monday, with shares dropping 2.8 percent to $68.40 a share, SolarCity’s stock has generally been rising upward. With its recent purchase of Silevo, a solar panel manufacturer, the company has jumped 30 percent in just one week. This acquisition will consolidate SolarCity’s solar panel installation business and solar panel manufacturing, creating a vertical business.
But what does this mean to you if you're just looking into having solar panels of your own?
Now more than ever Americans are getting into solar, incentivized by rebates and tax breaks along with a steep climb of electric rates. One of the biggest obstacles in the implementation of solar panels for average consumers, however, is the high cost. Despite government incentives solar technology remains rather expensive, averaging $20,000 a home.
What sets SolarCity apart is that instead of having homeowners make a large upfront payment, it leases the solar systems to customers. But is it a financially sound idea to lease solar panels from SolarCity?
SolarCity Attempting to Simplify Process
With the purchase of Silevo, SolarCity intends to become a one-stop shop for consumers, simplifying the process by providing manufacturing, installation, purchasing, and financing. Customers will lease the panels over a 20-year period and typically pay nothing or very little upfront.
SolarCity was founded by Lyndon Rive and Peter Rive, cousins of PayPal and SpaceX founder and CEO of Tesla Motors (TSLA) Elon Musk, who also serves as the company’s Chairman. SolarCity itself relies greatly on federal funds to provide its business. It has benefited from over $11 million in federal stimulus funds. But even more substantial savings come from tax breaks. Since SolarCity, and not the homeowner, owns the solar systems, SolarCity earns the tax break. These taxes have accumulated to about $411 million so far. SolarCity claims to have over 90,000 customers, including the US government, Home Depot (HD) , Best Buy (BBY) , and Walmart (WMT) .
SolarCity capitalizes on the sun as a natural resource and provides services in the form of designing, installing and maintaining solar panels. In some instances solar panels themselves account for only 20 percent of the overall cost of the system. The solar industry mainly profits from the cost of electricians installing the panels and hardware used to connect systems to the grid.
Before you get on board with SolarCity, SolarCity has to get on board with you. SolarCity is trying to create a mutually beneficial relationship with its customers, and that requires its customers to work for them as well.
What to Consider
If you’re thinking about leasing from SolarCity, one of the first things to take into consideration is your home’s location. It is important to make sure that you live in a state that has a suitable solar rating. There are many sites where you can estimate your solar rating and the effectiveness of a solar energy system for you, such as this solar calculator. All you need is your zip code, your monthly energy bill and your utility provider.
With a lot of sun, California is one of the best places to get the most out of solar energy in the world. Los Angeles specifically has an average of 292 days with sun annually, making it an ideal place to implement solar panels.
Other high performing states besides California include Arizona, New Mexico, Texas, Nevada and Hawaii. It is also important to make sure your home is not overly shaded by trees or nearby buildings. Residences with more shade than sun will not produce enough energy to be sustainable.
SolarCity claims that it will implement 100 percent free energy conversion if you qualify. They also cover maintenance and insure the solar systems. Along with savings that come from using less electricity from the power grid, surplus electricity is sold back to the local electricity supply company, which will typically help homeowners save enough to cover the panel’s lease payments.
To evaluate, SolarCity also needs a credit score and an on-site evaluation of your residence. If you meet all of SolarCity’s requirements they should be able to provide you with estimated savings.
SolarCity’s financial practicality is dependent entirely on a case-by-case basis. But if qualifications are met, signing up with SolarCity should bring you significant energy savings. But another benefit that cannot be overlooked is the environmental impact that solar energy will have on the planet as a substitute for carbon-based fuels. The sun provides enough energy to support all of Earth’s energy needs for an entire year, and investing in solar panels can help you reduce your own personal impact.
And as they say, “When there’s a solar energy spill, it’s just called a nice day.”
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