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SolarCity Installs Its First Thin-Film Solar Home

SolarCity, a solar installer and financier based in Foster City, Calif., has installed one of the country’s first thin-film solar projects on a residential roof.

The company installed 2.4 kilowatts worth of First Solar cadmium-telluride panels on a home in San Mateo, Calif., last week, SolarCity’s director of product marketing, Ben Tarbell, told me. The project will be connected to the grid in January, when it can take advantage of the expanded federal tax credits that Congress approved in October.

The system is expected to produce 3,348 kilowatt-hours annually, which is about 30.3 percent of the 11,040 kilowatt-hours the average household uses per year, according to the U.S. Energy Information Administration.

The array is the first of many thin-film projects that SolarCity plans to install in homes and businesses around the United States. The company, which raised $30 million in October, signed a deal that same month to buy 100 megawatts of panels from First Solar (s FSLR) over five years. The companies said then that the deal represented the first time that thin-film solar modules would be used in U.S. residential market.

Jonathan Bass, director of communications for SolarCity, now says some proof-of-concept installations already exist on residential roofs, but added that the company is First Solar’s first residential-installation customer. “Conventional wisdom has been that thin film is only for commercial and large-scale utility installations,” he said. “We’re challenging that conventional wisdom.”

Up until now, thin-film panels have mainly been relegated to larger applications because they convert less sunlight into electricity in peak conditions. First Solar panels have conversion efficiencies of about 10.5 percent, compared with efficiencies of up to 18 22 percent with SunPower’s traditional crystalline-silicon panels.

Lower efficiencies mean that customers need to cover more roof space to get the same amount of electricity, and some industry insiders have said that would make thin-film panels less suitable for residential applications, where such space tends to be limited.

But First Solar’s thin films cost less than crystalline-silicon panels. The company achieved manufacturing costs of $1.08 per watt – the lowest in the industry – in the third quarter. Advocates also claim thin films can convert more indirect light than crystalline-silicon panels and perform better in high temperatures, producing more electricity, or kilowatt-hours, per rated kilowatt of peak capacity.

While SolarCity plans to continue to install conventional crystalline panels from BP Solar, Kyocera and Evergreen Solar in sites where they make the most sense, the company expects that FirstSolar panels will make up a larger portion of its installations next year. “We’ve done an analysis of most of the systems in our portfolio…and [came up with] very few systems that we would not be able to install with First Solar’s technology,” Tarbell said.

Because the company finances most of the systems it installs — paying the upfront costs of the system in exchange for a contract to sell the electricity produced at a fixed, flat rate — it is particularly interested in how many kilowatt-hours a system can produce. Tarbell said that First Solar’s panels performed “marginally better” and cost less than conventional panels.

But the lower conversion efficiencies also mean that SolarCity needs to install more First Solar panels to produce the same amount of electricity as conventional panels, and that ups the installation costs. Tarbell contends, though, that the lower panel costs more than make up for the increase in panels, and SolarCity is also investing heavily into cutting the delivery and installation costs in the future, he says. “As a total package, if the metric is dollars per kilowatt-hour produced over the life of the system, we and our customers will do very well.”

The company, which began offering solar leases in April, said they acccounted for 90 percent of its sales by July, helping it surpass all of its 2007 sales in four months. Its year-over-year sales for the winter are “way up,” in spite of the economy, because it is able to offer electricity bill savings without any upfront cost to some of its customers, Bass said.

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