
SolarCity didn’t invent solar panel, but it invented something more important - prostoalex
http://www.slate.com/articles/business/the_juice/2015/07/solarcity_the_company_didn_t_invent_the_solar_panel_but_it_invented_something.single.html
======
diafygi
Holy hell is this a puff piece. Don't get me wrong, I'm a huge fan of
SolarCity, but this story is written as if they invented the solar boom that's
happening now.

Three major factors contributed to making solar as viable as it is now, none
of which Solar City invented (but it is executing on them better).

1\. Germany basically subsidizing China (and others) to build the massive
solar panel production pipeline it has now that are producing ridiculously
cheap panels[1].

2\. Financial innovation to allow consumers and installers to pay for panels
over time (PPA, leases, loans, etc.). These were originally pioneered by
SunEdison[2], and the industry has been innovating on them since (including
SolarCity with its MyPower Loan).

3\. The California Solar Initiative[3] and Department of Energy's Sunshot
Initiative[4]. Both were incredibly well designed to gradually wean solar off
of subsidies and foster innovation through strategic grants, and they have
worked incredibly well at teaching the solar industry to stand on its own two
feet. We are well on our way to $1/watt[5].

SolarCity has executed incredibly well in this industry, so they definitely
deserve tons of credit for installing so much solar. But it's a disservice to
the rest of the companies, governments, and financiers to say they invented
the recent growth. Everyone, including SolarCity, has come together to build a
mature and exponentially growing industry that was 1 out of every 78 jobs last
year.

[1]: [http://qz.com/41166/how-germanys-energy-transformation-
has-t...](http://qz.com/41166/how-germanys-energy-transformation-has-turned-
into-a-crisis/)

[2]: [http://archive.onearth.org/article/selling-the-
sun](http://archive.onearth.org/article/selling-the-sun)

[3]:
[http://www.gosolarcalifornia.ca.gov/csi/index.php](http://www.gosolarcalifornia.ca.gov/csi/index.php)

[4]: [http://energy.gov/eere/sunshot/sunshot-
initiative](http://energy.gov/eere/sunshot/sunshot-initiative)

[5]: [http://cleantechnica.com/2015/07/10/price-solar-hits-
record-...](http://cleantechnica.com/2015/07/10/price-solar-hits-record-low/)

~~~
minthd
Fictional myth building around Elon Musk is a recurring activity.For example,
the hyperloop:

"Two weeks before his Hyperloop announcement, Musk quietly met with the
founder of ET3, an even-faster, already patented[since 1999] tube transport
system."[1].

That's not to say Elon didn't help the hyperloop - he helped greatly by
exciting the public's and investors imagination. But he didn't invent the
thing.

[1][http://www.fastcoexist.com/3015704/futurist-forum/how-
much-d...](http://www.fastcoexist.com/3015704/futurist-forum/how-much-did-
this-hyperloop-lookalike-inspire-elon-musk)

~~~
logingone
"Well I say you are the messiah, and I should know, I've followed a few."

------
kumarm
From Wikipedia: In 2008, SolarCity introduced a new solar lease option for
homeowners that significantly reduces or eliminates the upfront cost of
installing solar power.

Several companies were offering Solar lease in 2007.

The article seem to imply that SolarCity invented Solar Leasing which is
inaccurate.

~~~
martin1975
Be that as it may, leasing vs buying is always bad, IMO. We just installed our
PV system in SoCal - I get the rebate, I own the system, when selling the home
eventually the new owner knows what he/she is getting and isn't encumbered by
the lease.... However you slice it, biting the bullet and buying your own PV
system is way way better than leasing it.

Maybe there are cases where leasing makes sense...but those are few and far
between...or maybe SolarCity counts on people being uninformed/clueless, which
is why this 'lease' model works. IMHO, it's total ripoff.

~~~
jbuzbee
I've always preferred to buy vs. lease rationalizing that I'm taking the
profit away from the middle-man for myself. And I'm interested in solar, but
I've been hesitant to contact any solar installation outfit because I fear the
installer's sales pitches, confusing contracts, phone calls, etc. Can I ask
ballpark figure what it costs to outright purchase panels for a typical house?
I realize that there are lots of variables such as house orientation, roof
size, electric usage, etc.

~~~
martin1975
The guy who did it for me is one of my best friends and he's been at it for a
few years - he's been in sales overall for 20+ years, but lately he's been
doing PV installations. He's fully licensed and bonded in CA. If you are in
the SoCal area, I can send you to him for a friendly rate and I am 99% certain
he will beat any other quote you get. Mine was 18k for a 5k system, using
Solarworld's Sumodule Protect ... Everyone else quoted me higher.

Post a (disposable) email address where I can reach you with his info if
you're in SoCal.

~~~
jbuzbee
Thanks for the $ info, but I'm in the Denver area. We get lots of sun too!

------
delbel
Big deal. They introduced the what is now called the "Financialization" of the
solar panel. They weren't even the first to do this.
[https://en.wikipedia.org/wiki/Financialization](https://en.wikipedia.org/wiki/Financialization)
You can do this to almost anything, here's a goofy example. I hate tying my
shoelaces and they always come undone, but I can't justify spending $70 on
Velcro shoes because of personal preference: basically I'd rather deal with
the annoyances of tying my shoe then to fork out $70 for Velcro shoes at the
moment. But, Wal-Mart sells a low quality Velcro tennis shoe for $10. The
problem is it only lasts about 6-8 weeks before the it falls apart. But by
converting the $10 shoe into a subscription service at $5 a month, a company
can turn a shoe into financial instrument, and _poof_ , magically it matches
my lower price point and I can justify a $5 subscription instead of a $70
sale. So, for $5 a month, or $60 a year, I will receive replacement shoes in
the mail every eight weeks. Like I said, that was a goofy example. Replace
shoes with solar panels and subscription with a lease agreement.

~~~
realusername
Yeah, I don't really understand, "Financialization" of solar pannels has
always been quite obvious (because it's an expensive and long term product)
and almost every solar company has always proposed some options for that, I
has been there since the birth of the industry.

------
cjensen
California plans to change to "time-of-use" pricing of electricity [1]. How
will that affect the savings currently seen by folks who lease from SolarCity
and other providers?

[1]
[http://www.usatoday.com/story/news/nation/2015/05/20/califor...](http://www.usatoday.com/story/news/nation/2015/05/20/california-
electricity-rates/27688891/)

------
jusben1369
There's a lot of negativity around this piece usually in the form of "some
other company had a lease program" etc. The author's main point to me was that
SolarCity is executing best _across a wide range_ of areas to bring solar to
the masses and growing TAM via new markets etc. Pointing out they weren't the
first with X is like poo poohing MSFT in the 90's because Apple had a GUI
first.

------
rogerbinns
I am interested in what is going to happen to the housing market. These
systems typically have a 20 year contract. If the house is sold before that,
then the purchaser has to assume the contract and the solar system. Those
contracts could be extremely undesirable if the energy rates change a lot,
better panels come out, financing/subsidies differs, it is better to use solar
for hot water instead of electricity, battery storage turns out better, or a
whole host of other scenarios.

If you were looking to buy a house, and it was 7 years into a 20 year solar
contract (hence locking in the rates/financing of 7 years ago), wouldn't you
want it either removed so you can put in something better, or be compensated
for taking on such obligations?

I can't find out how often houses are sold in California, but it seems like ~7
years is normal.

~~~
rbosinger
Yeah I have a small investment in SolarCity and I keep meaning to find out how
they handle this situation. Imagine in 5 years some stories coming out
regarding home owners having trouble selling (or losing value on) homes they
equipped under a solar loan. That would likely affect future sign-ups.

------
don_draper
Anybody know how these companies continue to get money from investors?
SolarCity, Tesla, Sun Edison lose money year after year. None of them are
profitable. And they won't be for years. I guess the thinking is that once, or
if, they get profitable they will benefit from being the established players.

~~~
jkestner
Yeah, it's called a startup. Amazon has similarly avoided making profits while
it can roll money back into expanding its dominance. The key is to articulate
and stick to a long-term plan.

------
Terr_
To quote Schlock Mercenary:

> "Your kind began as self-repairing distributed storage systems for our
> supercomputers. [...] No, I didn't create you. Engineers did.

> I created something far more powerful... _The marketing campaign that made
> you profitable._ "

------
pbreit
The processes mentioned still sorta basic but I think it's always useful to
point out that innovation extends beyond tech.

Also, I wonder where any of this (solar city, spacex and tesla) would be
without government help?

~~~
dylanjermiah
Musk has said Tesla didn't need the government money, it was just used as a
cash buffer (which of course was repaid early with interest). As for SpaceX,
they've been profitable for 7+ years and NASA is a client so not sure. As for
Solar City unsure, but government money doesn't make a business succeed. No
matter how much. (Solyndra) c

~~~
sremani
Federal Credits are crucial for SolarCity. Most of the SolarCity customers do
not own their Solar plants and SolarCity quotes a "very high" price if any one
asks for a SolarPV to own.

~~~
lotharbot
> _" SolarCity quotes a "very high" price if any one asks for a SolarPV to
> own"_

My rooftop solar (I believe it'll be ~6kw; installation is soon) is around
$20,000 to own outright, which includes 30 years of maintenance, whether or
not I pay it off early. Once it's paid, it's mine.

That's actually not a "very high" price compared to decades of electricity,
particularly not once you include the federal tax credit (30% of the system
price). So you're right that the federal tax credit is a big deal, but I
wouldn't have described the system as a "very high" price (it's around the
same amount as the average "minor" kitchen remodel.)

EDIT: the big deal with the federal tax credit is that it can be used as a
down payment, which makes the overall system payments begin at a lower price
than grid electricity rather than a slightly higher price. This means monetary
savings is immediate.

~~~
sremani
In 2013, for 10.5KW plant I was quoted $40K+ and I ended up with 20 year
leasing (paying entire amount upfront) for a notch less than $10K. Even adding
all the credits the ownership would have cost me 25K+. That is a huge
difference.

Of course the numbers vary a bit by state.

~~~
IkmoIkmo
So California has a capacity factor of about 17.5% as far as I can find, and a
residential cost per kwh of 17c roughly. Considering that, a 10.5KW system
saves you $2.65k per year, that is if you use that much energy, if not you
sell some at a slightly lower feed in tariff than the 17c retail rate.

That's pretty sweet. It kind of boggles my mind why this stuff isn't more
popular...

For example, imagine instead of using the $25k to cover your entire
electricity budget (let's assume it's $2.5k a year) for decades to come, you
earmarked it to be invested in a different project, with the returns going
towards paying the utility bill.

Had you invested the same $25k and got a typical long-term average stock
return of 7%, you'd net $1.75k every year, assuming your utility bill was say
$2500 and it was 100% covered by your $25k, 10.5KW system, you'd be short $750
on the first year compared to having put that money into a solar installation.

Which would mean it'd have to be made up, so you reduce the $25k stock
investment by $750, added to the $1.75k stock return, to pay for your annual
bill, and go into year two. Same story for year two, only now instead of
making 7% on $25k, you make it on $24.25k, and so your return drops from
$1.75k to $1.7k. As the years go on, your $25k cash becomes smaller and
smaller, and by year 17 it has evaporated entirely, and you start the bear the
full cost of paying $2.5k a year to your utility, without any equity or
investment or $25k cash left.

Instead, the solar installation of $25k probably still has $10k of equity
locked up in the value of your home, and is still generating about 85-90% of
your annual bill two decades in.

Not to mention electricity prices have gone up every decade (not necessarily
in real terms, but in nominal terms still), meaning your 10 KW system will
save more and more in nominal terms, while the $25k investment isn't inflation
adjusted. (it it was, the 7% return would probably drop to about 5%, making it
even worse off). -- edit: the 7% return is already inflation adjusted
actually, sorry.

And none of this even mentions the taxes that cut into your stock returns,
again making it a worse off venture, while it appears saving money on your
utilities with self-production is largely untaxed (?), just like making a
sandwich at home or doing your own laundry isn't taxed.

I know you ended up leasing but I don't know the terms of your lease, but
simply running some numbers for a buy scenario looks really appealing.

Of course it is very contextual. In cities where the kwh rate is just 9c
instead of 17c, and where the credits, rebates and tariffs aren't very
appealing, and where the capacity factor due to fewer sunshine hours is a
third lower (e.g. in the UK it's closer to 10%, as opposed to 17% in places
like California or Hawaii), it's a totally, totally different story. But it
feels like in California it's a giant no-brainer. I mean I know solar is
rapidly growing as an industry but we're also hearing of bankruptcies, of
Solar City having lost hundreds of millions this year and last year, of solar
still being a moral rather than a financial decision etc. And I can't seem to
square it with the numbers I'm seeing which look really appealing.

Let me know if you'd like to share some of the terms, numbers, expenses etc
for your lease by the way, would be curious to hear some real life cases!

------
aharonovich
The amazing part of it imo is that no matter the industry, a high tech company
with the high tech standards of IT, customer service and efficiency will win,
as long as it completes against classic industrial/commercial companies

