SolarCity to go public

The US firm is essentially filling a gap that only exists because of banks in the US have not yet realized what a safe investment solar is, as a look at the UK and Germany reveals.

The US solar market remains firmly in the hands of large corporations, who set up utility-scale plants, such as the El Dorado project pictured here. But ownership looks like it will remain with big business even on the residential market if leasing models prevail. Source: First Solar

In the third quarter of 2012, SolarCity is expected to go public with the assistance of Goldman Sachs, the company announced last Thursday. If you are not familiar with the firm, it may be because they do not actually make solar equipment. Rather, as Reuters explains, the firm is "the top US installer of residential solar systems" with an interesting business model: homeowners receive "ordinarily pricey solar panels" installed for free and then pay for the power they use. A third party owns the array. This approach is praised for helping homeowners overcome the great upfront investment cost.

From a German perspective, however, the necessity of such a leasing model is unclear. Residential solar arrays have become so commonplace in Germany over the past decade that even the smallest savings and loan bank will be happy to finance such investments, which are completely safe thanks to German feed-in tariffs. But the situation in the US is much different. As solar installer Bill Ball of Arkansas told Renewables International, “It‘s easy to get a bank to fork over 20,000 dollars for a bass boat, which is always going to cost you more than you get out of it, but the banks around here won‘t touch PV arrays even though they actually provide some income in any case."

But feed-in tariffs do not magically change the situation overnight, as the UK shows. The British adopted feed-in tariffs for solar two years ago, and immediately the same business model cropped up, with companies getting a lot of press coverage for their promise to give away solar roofs for free. Slowly, the British came to understand what feed-in tariffs represent, and gradually the press began to warn that "homeowners will lose out on tens of thousands of pounds if they take out these superficially generous deals," as the Guardian wrote in August 2010.

For the time being, however, no feed-in tariffs are on the horizon in the US for solar, so SolarCity's leasing model may indeed be the best deal in town, though it will continue to ensure that large corporations rake in the profits, while the little guy remains shut out. (Craig Morris)