2GW of solar by the end of '15

Big growth, but also losses, for solar company SolarCity

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By the end of 2014, solar installer and financier (and soon to be solar panel manufacturer) SolarCity had installed about 1 GW worth of solar panels cumulatively on the rooftops of commercial and residential buildings. For comparison’s sake, that’s like the total of a really large coal or natural gas plant, but scattered across tens of thousands of rooftops. But SolarCity confirmed in its fourth quarter and year-long earnings Wednesday that it will install another gigawatt of solar panels in 2015 — basically doubling its entire amount this year.

The dramatic growth can be seen not only in SolarCity’s growing revenues, but also in its losses. For 2014, SolarCity generated revenue of $255.03 million, up substantially from its 2013 revenue of $163.84 million. But losses also widened significantly as well, and SolarCity posted a loss of $375.23 million in 2014, which was much larger than its loss in 2013 of $151.76 million.

SolarCity panels, image courtesy of SolarCity.
SolarCity panels, image courtesy of SolarCity.

From Wall Street’s perspective, SolarCity posted a wider-than-expected loss in the fourth quarter of this year of $141.14 million, from a Q4 2013 loss of $64.54 million. SolarCity’s stock dropped more than five percent on the earnings news.

To sustain its growth in this highly competitive market, the company is investing heavily in sales and marketing (close to $80 million in the fourth quarter of 2014 and $239 million for the year). The company is also investing in lowering its costs down the road, through its recent acquisition of Silevo and R&D into lowering the costs of its solar systems.

The good news is that SolarCity’s growth strategy is working to grab market share. The company, which is only eight years old, said it has the largest amount of solar customers among its competitors (190,000 by the end of 2014). It has a goal to have 1 million customers by 2018. SolarCity has long been strong on selling solar panels to residential customers, and the company grew its residential solar panel deployments by 110 percent from the previous year.

SolarCity factory in upstate New York.
SolarCity factory in upstate New York.

The bad news last year, beyond the continuing losses, was that SolarCity had some delays in projects with its commercial customers, leading to less commercial projects deployed. Also, naturally, SolarCity and its solar energy generation don’t perform as well in the darker winter months.

One of the interesting newer initiatives from SolarCity is its acquisition of Silevo and its plan to build its own solar panels in a factory in upstate New York. Being a vertically integrated solar company can help SolarCity cut costs and control its supply chain.

The company said on the earnings call that its factory in New York will be ready by the first quarter of 2016. “The foundation has been poured and erection of the steel structure is expected to begin over the next few weeks,” the company wrote in its shareholder letter.