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The Initial Public Offering (IPO) of Facebook Inc. (NASDAQ:FB) has been dominating the news, but I am more interested in another IPO that is developing. One of the largest solar installers in the country, SolarCity, has filed a confidential application to the SEC to create an IPO of its shares. This is an exciting development, and is reflective of a new theme in solar investing that is worth following.

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The smart alternative energy money is moving toward solar installation companies, not solar component manufacturers. Considering that there has been much focus on solar bankruptcies in the past year, including Solar Millennium, Evergreen Solar, Solar Trust of America, and the infamous case of Solyndra, this solar IPO looks to be the hallmark of a new trend. And how this IPO turns out should be very telling as to whether or not this trend has legs.

Since the application was just submitted at the end of April, it will take time for the regulators to review the request and for the company to finalize preparations. Because this is a confidential application, details are murky so it is hard to analyze whether shares will be a good investment or not. One promising clue comes from Technology Review, published by MIT. It reports that SolarCity has more than doubled its market share of the residential installation market between 2010 and 2011.

Just the fact that an investment banker is willing to sponsor the IPO, though, is also a good sign. It likely means the bank's research shows that SolarCity has a sufficiently large market, a competitive edge, a profitable business plan and a management team that can execute. Nevertheless, we will have to wait a few months to see if the IPO is a success.

The feature article of the most recent issue of the Roen Financial Report talks of the advantage solar installation companies have, given the steady drop in photovoltaic component prices (the article names three other companies that should benefit from this trend, and also details two other forward-looking alternative energy investment themes).

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Sometime around August of this year, however, when the SolarCity shares will likely go public, investors will see clearly whether solar installers will be the profit centers of the future. Stay tuned to follow developments in this dynamic area.

Source: SolarCity: An IPO That You Should Be Watching