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Summary:

SolarCity, which has built a business around installing solar panels on rooftops, plans to file for an IPO as early as next month, according to Bloomberg. The report says the IPO will value the company at more than $1.5 billion.

SolarCity installation

SolarCity, which has built a business around installing solar panels on rooftops, plans to file for an IPO as early as next month, according to Bloomberg. The report says that the IPO will value the company at more than $1.5 billion. SolarCity has yet to confirm the report, which quoted anonymous sources.

If it does go public, SolarCity could be one of the rare cleantech or solar companies that braves the public markets this year, and it could provide the company’s venture capital investors a sizable return.

Two other solar startups, solar thermal power plant developer BrightSource Energy and inverter developer Enphase Energy, filed for IPOs last year but have yet to make their public debut, given the lackluster IPO market.

The appetite for solar company shares also dropped sharply when many public solar companies suffered big drops in profits last year. First Solar, the industry bellwether, saw its shares plummet more than 70 percent. Investors aren’t likely to feel bullish about any solar IPOs if they don’t see the public companies regain their footing, said Sheeraz Haji, the CEO of Cleantech Group, earlier this month.

But many of those public solar companies that suffered financially are manufacturers, which have to contend with a global market and a glut of solar panels. SolarCity, on the other hand, buys and installs solar panels, and that means it has actually benefited from the drop in wholesale solar panel prices in the past year.

SolarCity installs solar panel systems for residential and commercial customers, who either pay off the up-front cost for the system and service or pay a monthly fee for only the electricity generated from the equipment. The latter model has become a popular way to attract new customers, given that a typical solar electric system costs around $30,000 outright. The model also creates an investment opportunity for banks and others to finance installations.

The company started off in California and expanded westeastward. It now serves mostly the West and East Coasts.

The startup, founded in 2006, was looking to raise a $42 million round and lined up $14.8 million as of July last year. In 2010, it raised a $21.5 million round led by Mayfield Fund. Its other investors include Draper Fisher Jurvetson, DBL Investors and Generation Investment Management. Tesla’s CEO Elon Musk also is an investor and is SolarCity’s board chairman.

SolarCity has lined up funds from the likes of Bank of America and U.S. Bancorp and Google to finance solar installations. One of the most recent agreements involved getting $350 million from Bank of America to install about 300 MW on military housing over a 5-year period.

Photo courtesy of SolarCity

  1. “The company started off in California and expanded westward.” That makes no sense…

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    1. Well, we are in Hawaii, too. I guess you could call that eastward.

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    2. I thought earth is round. So either way SolarCity will land in whichever states it wants.

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  2. You’re right Kyle. Typos are not allowed. Especially on blogs.

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  3. Oops. Yeah we’ll fix that.

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  4. Will be interesting to see how the public markets value the business given that it is primarily a leasing business, which has challenging GAAP revenue treatment. Betting that they are not yet profitable and will be challenging to get there given their fully vertically integrated downstream model – thousands of installers on staff.

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    1. Thanks for your thought on SolarCity as a public company. I am writing more about companies that farm out the installation rather than using in-house labor, so SolarCity’s model sets itself apart for good or bad. I would think this model works for controlling the quality of labor and other service, especially in the early days of the solar service industry. But it also means a big payroll burden.

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