By Alison van Diggelen, host of Fresh Dialogues
SolarCity’s CEO Lyndon Rive sat down with Fresh Dialogues last week to share details of the solar company’s business model, rapid growth, and ultimate goal of being the world’s largest energy provider. Yes indeed: this 35 year-old entrepreneur from South Africa anticipates no less than world domination.
Although Rive was tight lipped about the impending IPO expected in Q3 this year, he referred to the $280M investment from Google last year and said, “Our expectation is that companies like Google and other Fortune companies start making similar investments.”
“In order to monetize the full benefits of the solar system you need a large tax paying company. .. might as well use that tax bill to motivate the growth of the renewable industry…” he added. “We are approaching hundreds of Fortune 100 and 1000 companies…and will continually be raising funds, potentially in perpetuity.”
SolarCity is targeting companies that can benefit handsomely from the 30% Federal Business Tax Credit for solar investments. Although Rive wouldn’t name names, Apple Inc. springs to mind immediately. Record profits and enormous tax base? Check. Recently inclined to alternative energy investments? Check. In case you missed it, Apple recently invested in a massive 4.8 megawatt fuel cell development using Bloom Energy technology. Watch this space. We’ll keep you updated.
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Business Model
SolarCity’s innovative model offers a range of solar options. Customers can buy systems outright or pay zero down and lease or purchase the power the system produces. Large investments from partners like Google allow the company to make solar affordable and continue growing rapidly. Rive described the company’s business model thus: “(We) install solar systems for free, so we need capital to pay for that, and take a long term revenue stream on the electricity that we sell. So, as fast as we grow, that’s the business model that we’re in.”
Chinese Solar Panels and Tariffs
The Obama administration recently imposed tariffs on solar panels manufactured in China. Rive confirmed that about 50% of the panels SolarCity installs are made in China (the remainder come from Japan, Korea and the US). Is he not concerned that the era of “cheap” Chinese panels is over and that will impact the company’s bottom line?
“It’s more of an annoyance than a concern,” Rive said. “It’s a worldwide market…if China’s costs go up, we’ll just buy from somebody else.”
He added that economies of scale is the largest factor driving cost curves down and that in California, despite incentives being reduced from $2.70/watt just five years ago to 25c/ watt today, adoption has never been higher.
Job Growth
The company, founded by Lyndon Rive and his brother Peter on Independence Day, 2006 now employs 1700 employees in twelve states and D.C. The company is hiring about four new employees a day, Rive confirmed. With this rapid expansion, and a market share which grew from 6% in 2010 to 14% in 2011, I asked the young CEO if the company was over extended?
“We have a four month waiting list….four months is totally acceptable. Our customers totally understand it,” said Rive. “Could we grow even faster? Yes. But then the wheels may start getting shaky. So we are growing at a healthy rate to ensure quality, safety and also customer satisfaction.”
Check back soon for:
Elon Musk’s contribution to SolarCity – he’s Lyndon Rive’s first cousin and SolarCity chairman, but what else has he contributed to the company?
The Net Metering Battle – Lyndon Rive has a win win solution for utilities and solar companies. How does he see the battle being resolved?
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