First Solar Enters Residential Market with $25 Million SolarCity Financing

By Ucilia Wang

First Solar (FSLR) said Wednesday it has invested $25 million in SolarCity and has agreed to supply thin-film panels to the solar financier and installer.

The deal, which marks the thin-film company's entry into the residential market, calls for Tempe, Ariz.-based First Solar to deliver 100 megawatts worth of solar panels to SolarCity over five years beginning in the first quarter of 2009.

SolarCity, based in Foster City, Calif., installs solar-power systems on residential and small commercial properties in California, Arizona and Oregon. The company also offers leasing options, paying part of the upfront cost of a system, which could set homeowners back roughly $30,000.

The $25 million in funding is part of a $30 million round the company raised, with investors including JP Morgan, Draper Fisher Jurvetson and DBL Investors. The round brings SolarCity's total capital to $56 million.

First Solar announced the deal the same day it is due to release its third-quarter earnings after the market closes. In recent trading, First Solar shares rose nearly 10 percent to reach $124 per share.

The thin-film maker's entry into the residential market – and its interest in SolarCity – is perhaps not surprising. Its CEO, Mike Ahearn, complimented SolarCity at the Solar Power International conference in San Diego two weeks ago during a panel that also included SolarCity CEO Lyndon Rive.

Speaking about the residential solar market, Ahearn said it wasn't far from being cost effective and efficient.

"You still have to be an enthusiast and get it done," he said. "SolarCity has done a better job than most."

Both Ahearn and Rive expressed concern that consumers might have trouble evaluating goods and services when the market is so new and new installers are popping up quickly.

"If you look at the warranties today, it will be difficult for consumers to understand where there is a claim proven and who's responsible," Ahearn said. "You can get wide-spread disappointment over time, and it will come back to bite us."

Some industry insiders expect the residential solar market to grow rapidly as a result of a recently passed federal tax credit, which can make a solar-energy system 30 percent cheaper (see Lawmakers Approve Energy Tax Credits, Bailout).

Residential solar installations may also see a boost from states and cities that are setting up their own incentive programs. San Francisco and Berkeley both set up financing programs this year that will make buying and installing solar energy systems more affordable for residents and businesses (see Berkeley to Launch Solar Financing Program and San Francisco Solar Incentives Become Official).

But whether more consumers will spend money on solar during the economic downturn remains to be seen (see Solar Mergers: Guarding Against a Slumping Economy).

SolarCity launched its residential leasing program in April 2008. By July, one of its executives said revenues from the program had surpassed all sales from 2007, when the company brought in $29 million in sales (see SolarCity Sees Sales Spike).

While the partnership with SolarCity marks First Solar's first announced deal with a residential installer, it's not its first foray into installation. First Solar in November acquired Ted Turner's company DT Solar, which installs commercial solar projects, for $34 million.

Comments

[Gumby:]

IF YO THINK SOLAR IS NOT AFFORDABLE AS COMPARED TO $1.50 GAS THERMS OR 20 CENTS KILOWATTHOURS,, WAIT UNTIL 5YEARS LATER AND YOU GET SOCKED WITH $5 GAS THERMS AND 75 CENTS KILOWATTHOURS... YOU WILL KICK YOUR BUTT FOR NOT DOING IT BEFORE... IT IS N OT ABOUT PROFITS.. IT IS ABOUT SUPPRESSING FOSSIL FUEL COSTS IN THE FUTURE... FOSSIL FUELS IS BECOMING A MONSTER SO BIG AND FAST... DONT LOOK AWAY FOR A SECOND.. KEEP YOUR EYES ON THE BALL!! SUPPRESS, SUPPRESS, SUPPRESS IS MORE PROFITABLE...

2008 Oct 29 03:39 PM

[Gumby:]

PRISONERS DONT WORRY ABOUT PROFITS AS THEY FIX TO ESCAPE OUT OF THE DAMN OIL PRISON!!

2008 Oct 29 03:40 PM

[Gumby:]

WE GOTTA ESCAPE FROM BIG OIL'S TENTACLES!! WE GOTTA !@! OR WE WILL BE SORRY AND ENSLAVENED TO BIG OIL.. WE WILL NOT BE ABLE TO AFFORD TO DRIVE ANYMORE AND WE WILL BE UNABLE TO MOVE FAST ENOUGH ANYMORE... WE WILL BE STUCK WITH PUBLIC TRANSPORATIONS AND HOUR LONG WAITS AT THE BUS STOPS!! NO NO HELL NO WE WONT GO!! TIME TO SUPPRESS BIG OIL NOW!! TO KEEP OIL FLOWIING AT LOWER VOLUMES AND KEEP ALL OUR CARS SMALLER AND LIGHTER... STOP HEATING WHOLE HOMES AS WELL AS COOLING WHOLE HOUSES!! ETC THINK ENERGY CONSERVATION... GO SOLAR AND WIND!! SUIPPRESS SUPPRESS BIG OIL COAL NUCLEAR!! MUZZLE THE BEASTS OF THE GOOEY OIL
!

2008 Oct 29 03:44 PM

[Gumby:]

THE RICH AND FILTHY IS STILL CLUTCHING BIG OIL STOCKS IN FUTILE HOPES OF SEEING OIL PRICES REBOUNDING AGAIN TO $145 A BARREL... SAY NO TO RICH AND FILTHY SUPPPRESS THE RICH AND FILTHY AND BIG OIL ALTOGEHTER!!! THEY ARE WASTING OUR TIME @!@!@@ WE ARE NOT GONNA WAIT FOR THEM TO COME BACK WITH THIER TRILLIONS OF DOLLARS.... THEY WILL FOLLOW US EVENTUALLY AND TOO LATE!! WE CAN GO ALONE!

2008 Oct 29 03:46 PM

[bostonrose:]

If you commentors are so smart, why did you forget to turn off the Caps lock key

2008 Oct 30 08:46 AM

[Piggybank:]

Gumby is not representative for the average commenter on this site. More representative for the average caps typer. And yes he made 4 posts full of caps, but it was all by him, so its only one commenter that types in caps.

2008 Oct 30 06:17 PM

[10Q Detective:]

They will need to turn to U.S. residential markets if German customers are unable to secure adequate financing!

industry.bnet.com/ener.../

Your thoughts?
My Best,

David J Phillips – Editor, 10Q Detective
Contributing Energy Analyst
CBS/CNET

2008 Nov 01 02:24 AM