Tuesday, January 14, 2014

Solar Power Craze on Wall St. Propels Start-Up

... Not even [Elon] Musk, the billionaire behind the Tesla electric car, could have foreseen the solar power craze that is sweeping Wall Street. He [is] riding a wave of exuberance over the industry and their young business, SolarCity.

The company — the nation’s largest provider of rooftop solar systems, with more than 80,000 customers — has not made a dime. And, frankly, no one quite seems to know when, or if, it will.

But SolarCity [www.SolarCity.com] has captured investors’ imaginations and become a potent symbol of a stock market ascent that makes the vertigo-inducing heights of Twitter seem tame. SolarCity’s share price, which closed at $59.27 on Friday [January 3, 2014 and on January 14, 2014 closed even higer at $65.55], has soared more than sevenfold since it went public, and the company, which did not exist eight years ago, is valued at roughly $4.9 billion.

Depending on whom you talk to, the rise of SolarCity and similar companies is either a sure sign that solar power is finally having its day or that yet another mania has gripped the markets. Two other companies, SunPower and SunEdison, have also exploded in value. In all, an estimated $13 billion was invested in solar projects in 2013, a tenfold increase since 2007, according to GTM Research, which tracks the industry....

The broad stock market is coming off its best year since 1997 — the Standard & Poor’s 500-stock index rose nearly 30 percent in 2013
[Solar City] and a handful of others, decided not to simply sell solar systems. Instead, they pioneered a way to sell the energy itself, making SolarCity almost like a newfangled utility.

SolarCity and competitors like Sunrun, Sungevity and Vivint install rooftop systems for little to no upfront payment and then sell the electricity for prices below what customers pay utilities. Though greeted with skepticism at first, the service has proved appealing to customers who want solar power but do not have the cash to buy a system outright.

Still, SolarCity and its ilk face formidable challenges. It is trying to outrun rivals in a race to transform the power industry. Utilities are furiously working to undo the incentives that have fueled the solar industry’s growth. A generous federal tax credit is set to shrink in a few years. It has attracted the attention of regulators, who have questioned the way it values the rooftop systems.

And, because of its stock price, it must continue to feed Wall Street’s appetite. “The market expects them to grow really rapidly for a while — there’s no other way that that price makes sense,” said Shayle Kann of GTM Research.
Complaints to the Better Business Bureau of misleading marketing and flawed installations, along with negative reviews on social media forums like Yelp, appear to be rising.
SolarCity will not predict when it will make a profit....
“This is the biggest homeowner’s mistake I have ever made,” said Jeffrey Leeds of El Grenada, Calif. With an electric bill running up to $450 a month, Mr. Leeds turned to SolarCity in 2012.  But last fall, he owed his utility $1,300 — more than double what he expected. SolarCity told him he must have used more energy, but Mr. Leeds said “absolutely nothing” had changed about the way his family lived.  SolarCity and Mr. Leeds agree that his overall costs were lower, but disagree on how much. Mr. Leeds said he saved $200, the company said about $575.... SolarCity said Mr. Leeds’s case was unusual, affected by a complex design, a persnickety inspector and unusually foggy weather. Most customers are satisfied, it said; the rate of complaints has remained steady even though the company now signs up a new customer about every three minutes of the workday.

By Diane Cardwell and Julie Creswellen
The New York Times www.NYTimes.com
January 3, 2014

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