The leading residential solar service provider of the U.S., SolarCity Corp. SCTY will now make its new “MyPower” loan program available to homeowners in New Mexico – one of the sunniest states in the country. SolarCity will open its first center of operation in Albuquerque by the end of this month, allowing homeowners to install solar photovoltaic systems with no upfront costs.
San Mateo, CA based SolarCity launched its MyPower loan plan in Oct 2014. This plan allows its customers to own their solar systems and still pay less for electricity when compared to leasing them through power purchase agreements (PPAs). This move is reshaping the rooftop solar market and driving rapid adoption.
The MyPower loan program has caught the attention of U.S. residents. This loan facility has already won over 12,000 subscribers since its launch. Through this finance program, SolarCity is the latest company to offer consumers the option of a 30-year loan, which comes with an interest rate as low as 4.5% and no upfront costs.
Loan repayment is calculated on a per kilowatt hour production basis, with the payment rate set at up to 20% less than what the utility charges per kilowatt hour. The customer would pay back the loan at 16 cents a kilowatt hour for the first year. After that, the customer gets a $9,000 tax credit and then their cost for solar is about 11 or 12 cents a kilowatt hour.
SolarCity will roll out its MyPower program for Public Service Co. of New Mexico customers in Albuquerque, Santa Fe, Las Cruces and nearby areas. The company has plans to take the program to other areas as well. It plans to hire 50 employees for immediate initiation comprising sales, PV installation and associated tasks.
Solar companies are rapidly expanding their businesses and winning customers before they lose a key federal tax credit in 2017. The 30% tax credit for solar systems on residential and commercial properties is expected to drop to 10% in 2017. As per Solar Energy Industries Association, the tax credit has been instrumental in boosting solar installation by a compound annual growth rate of 76% since it was implemented in 2006.
Although the money SolarCity is investing in its business is weighing on its bottom line, it will likely boost its top line over the long haul. The company however brought down its average cost per watt by 9% year over year to $2.86 during the fourth quarter 2014. It further aims to reduce this cost to $2.50 per watt by 2017.
Moreover, the company’s ingenious marketing ploys have helped in ramping up installations. MyPower accounted for nearly 30% of the company’s residential bookings in the fourth quarter. It has also increased the interest rate on the loans for new customers in most of California from 4.5–5.0% to 5.0–5.5%.
That being said, the company has failed to earn profits for nine consecutive quarters while its operating expenses have risen significantly. SolarCity also faces intense competition from other solar energy providers, such as, Vivint Solar Inc VSLR and SunPower Corp SPWR, given the industry’s vast growth opportunities. The U.S. Energy Information Administration projects solar consumption in the U.S. to surge 85.7% to 0.570 quadrillion btu in 2016 from 2013 levels.
SolarCity currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the same industry is JA Solar Holdings Co., Ltd. JASO, carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment