SolarCity Prepares for IPO

SolarCity, the leading solar installer in the US, is planning to go public in the third quarter this year, reports Reuters.

If successful, the launch on the public markets could value the company at $1.5 billion. 

Based in San Mateo, California, SolarCity has grown rapidly since it was founded just 6 years ago. In the first quarter of 2011, the company’s share of the US installation market was 14%, according to GTM Research.

While manufacturers suffered last year because of unprecedented low prices for solar panels, installers benefited. They could buy panels at historically low prices and sell systems at lower prices to end users. 

SolarCity and other installers that use a solar leasing business model have benefited the most. SolarCity owns and installs systems on residential rooftops and homeowners pay a simple monthly electric bill. 

The solar leasing model has become increasingly popular as it gives homeowners an easy way to benefit from solar without paying the large upfront costs of installing and owning the system. They sign long term agreements with SolarCity which gives them a guaranteed price for electricity that’s the same or less than that of their utility bill – that protects them from rising utility rates. 

The owners of SolarCity are first cousins of Tesla Motors CEO Elon Musk, a co-founder of PayPal. He serves as SolarCity’s chairman.

SolarCity hired Goldman Sachs to underwrite the IPO and will file with the SEC within a few weeks, according to a Reuters’ source.

In June, 2011, Google made its largest investment in renewable energy – $280 million to fund SolarCity residential solar installations. The Google Fund is SolarCity’s largest project financing fund and the largest residential solar fund created in the U.S.

SolarCity has created 15 project funds with seven different partners to finance $1.28 billion in solar projects. They will repay the investment, with interest, to Google.

SolarCity says it has over 15,000 solar projects completed or underway across the country. More than 12,000 of those customers have chosen the solar-as-a-service financing option, while 3,000 have purchased their systems outright.

In November, 2011, SolarCity announced a deal with Bank of America Merrill Lynch to finance the debt portion of its $1 billion SolarStrong project to install solar PV on military housing across the US.

The project will double the number of residential solar systems in the US. 

Over the next five years, SolarCity will install 371 MW of solar on as many as 120,000 military housing complexes in 33 states – the largest residential solar PV project in the US.