Vertically integrating the rooftop solar market

Last spring I mused on whether we would see vertical integration in the solar market when First Solar acquired TetraSun and eyed the Japanese residential rooftop market. The opportunity to be the panel maker, installer, proprietor of mounting systems, marketer and even financing vehicle seemed to be a very tempting way to drive competitors out of the market while driving up margins.

Apparently SolarCity was thinking just that. After picking up Zep Solar, a maker of mounting systems, and Paramount Solar, an virtual sales and marketing company focused on solar, the company took the final critical step recently by acquiring Silevo, a maker of solar modules with efficiencies of 21 percent at converting sunlight to electricity.

SolarCity already controls roughly a third of the rooftop solar market and while the Silevo plant will be up and running in 2016 at the earliest, it’s going to get increasingly difficult for competitors to survive. Vivint and Verengo will struggle to match the company’s efficiencies of scale and vertical integration while mom and pop regional installers will face similar problems. SolarCity acquisition is the beginning of building a highly defensible position, effectively locking others out of the market.

And if you look at the language that SolarCity’s Chairman Elon Musk has used, it’s clear that SolarCity isn’t even particularly concerned about competition being other solar installers. Rather, when he writes things like the “”Goal is for unsubsidized solar power to cost less than grid electricity from coal or fracked gas” it’s clear that the company is gearing up for a long term cost fight against natural gas power and retail electricity rates.

The Silevo acquisition comes on the heals of Tesla’s own announcement that it would be building a “gigafactory” to produce batteries. In both cases one of the stated reasons is that not enough batteries and panels would be available to meet market demand. That’s probably more true for batteries than solar power, where there’s actually oversupply. But really the real reason is that Tesla and SolarCity realize they want to be in charge of the core building block at the base of their respective businesses.

And going forward it’s likely that the companies will become more intertwined. As Tesla lowers the cost of batteries and SolarCity expands, we’re likely to see greater cooperation where selling residential customers solar systems combined with less expensive battery backup systems for the evening hours becomes more ready for the mass market. This is one way of handling the ongoing net metering fights in which utilities are pushing for larger connection fees and new formulas to lower payments to residential solar customers that want to sell power back to the grid. Someday soon it may be cost effective to be grid independent.

The realities of Musk’s strategy to vertically integrate both Tesla and SolarCity has not been lost on the competition. Boston-Power, a battery manufacturer which began in Massachusetts before moving to China to focus on manufacturing there for the Asian market, recently raised $250 million. CEO Sonny Wu noted to The Wall Street Journal“Somebody has to compete with him [Musk].” With China’s significant urban pollutin problem, there’s optimism that an EV market could find more growth in the coming years.

In the end, both Tesla and SolarCity have opted for vertical integration, wanting to be in control of IP and manufacturing. Others will argue that advantages remain for a value chain in which panel makers specialize to produce greater efficiencies or solar financing firms optimize capital costs. But at the types of volumes and profit margins that Tesla and SolarCity are gunning for, there’s an equally good argument that these two companies will have capital to pour into R&D while expanding margins as competitors struggle to compete.

This is how touch and go the SolarCity IPO was

SolarCity CEO Lyndon Rive says the company’s IPO was so touch and go in the 11th hour that at one point the team had actually booked tickets to fly back to San Francisco from New York.

Google invests $280M in SolarCity solar roof fund

Google is emerging as the ultimate clean power sugar daddy. On Tuesday, Google announced it has made its largest investment in clean power to date, creating a $280 million fund for rooftop solar panel projects that will be installed by solar company SolarCity.

Electric Car Roadtrip! Courtesy of SolarCity

roadtripReady to make that grueling San Francisco to Los Angeles roadtrip . . . in an electric vehicle? Yeah, that doesn’t sound so great given the current limited range of EVs, but solar installer SolarCity has decided to lend a hand and has built a set of four solar electric-car charging stations along U.S. Route 101. SolarCity is calling the project the world’s first solar-powered electric-car charging corridor, and the stations have been built in parking lots belonging to Rabobank, the California subsidiary of the Dutch banking group, in Salinas, Atascadero, Santa Maria and Goleta. The project was built using funds from the California Air Resources Board as well as grid electricity and space donated by Rabobank.
The stations start to address what has been a major deterrent with electric vehicles -– the fact that they have ranges much smaller than that of gasoline cars. While some advocates scoff at the issue, pointing out that most Americans commute less than 35 miles per day, car companies worry that mainstream drivers will be reluctant to buy cars that they can’t take on road trips. As it is, electric-car drivers are afraid to drive far from their chargers.
Read More about Electric Car Roadtrip! Courtesy of SolarCity

10 Questions for SolarCity’s CEO

While we were all out watching fireworks and flipping burgers on the on our nation’s Independence Day, solar installer SolarCity quietly turned 2. The startup’s birthday also came in a week when San Francisco began offering residents rebates — $3,000 to $6,000 per solar power system — and SolarCity is one of the installers that has been working with San Francisco’s Mayor to get the program (finally) passed. Here are 10 questions we wanted to ask SolarCity’s CEO Lyndon Rive about the company’s business model, community programs and power purchase agreements:

1). San Francisco just passed one of the most aggressive municipal solar project in the U.S. How will SolarCity capitalize on this project?

SolarCity has been working with Mayor Gavin Newsom’s Office of Economic and Workforce Development on getting this incentive passed since Day 1, so we are thrilled to see the city realize its goal of making solar power affordable for San Francisco residents. We’ve committed to opening a training academy in the Hunter’s Point neighborhood to help create green jobs in the city, and we’re on track to open this summer. The incentives vary by neighborhood and income level, but the most aggressive incentives can allow us to offer our lease program to San Francisco residents for as little as $24 per month.

2). The solar installation business seems to be based more on traditional business tools, like marketing and efficient business processes, than many other technology companies in Silicon Valley. How does SolarCity differentiate itself from other installers?

SolarCity’s founding mission was to make solar a more realistic option for everyone by making it as affordable and easy to use as electricity from the utility company. Technology actually plays a bigger role in our business than may appear on the surface. My brother/co-founder and I founded and ran a technology company for 10 years prior to starting SolarCity, and we leverage a number of proprietary technologies to create efficiencies that we feel are unique in the solar industry.
Read More about 10 Questions for SolarCity’s CEO

Unusual Web Work: EveryScape Ambassador

ScreenshotPerhaps the easiest way to describe EveryScape‘s business plan is “Google Street View, only more so.” When you visit one of their sites, such as their Boston page, you can drive around and see the city in a 360-degree panning window. But you can also enter buildings and see what’s inside – places like the Paul Revere House or the original Cheers.

Right now, Everyscape only covers a dozen or so cities, and that’s where the job opportunity comes in. If you live in one of the cities that’s next on their plan, you can apply to be an “Everyscape Ambassador” – someone who drives around with the appropriate fancy equipment, taking the images to be digitized. This requires a team of two and pays on a per-mile basis – supposedly high enough to be a full-time job. Certainly it would be different from the usual run of web design, coding, and virtual assistant work!

We’ve won quite a few InkBlot awards!

2007inkblot_thumbWarner Crocker has been having InkBlot awards for a few years now and each year they get better and better.  He’s made his awards for this year and Kevin and I are thrilled to be the recipients of quite a few of them.

There are many awards that you should check out presented in the way that only Warner can do.  We’d like to thank Warner and the InkBlot Academy, our parents, readers and most of all our pets for the support they give us.

Spam & Slashdot

Talk about Saturday morning good news bad news. No New York Times delievered this morning, no coffee in the apartment, slight hangover, and a massive spam attack that brought down the server because it used up nearly 2 GB of memory on the server. How about that for bad news? Good news, my little post on SBC is now on top of Slashdot. Oh back to cleaning out the spam!