SolarCity Corp. SCTY is collaborating with MP2 Energy to offer solar energy to Texas homeowners at reasonable costs through a one-of-a-kind program.
The program, known as full “net metering”, will be made available to the residents of the Dallas-Fort Worth area, TX, who sign up for service by SolarCity and electricity service by MP2. They will receive full credit for the solar electricity supplied to the grid.
As per the offering, SolarCity will enter into power purchase agreements with the homeowners to install solar panels. The homeowners, on the other hand, will be required to purchase power from the solar panels for 10.9 cents per kilowatt hour (“kwh”) and the additional power generated would be fed into the grid for 12 cents per kwh. The deal also includes a provision for MP2 to buyback the excess power that will be generated at a rate of 12 cents per kwh.
No ceiling is implemented and customers may carry forward the additional power generated to subsequent bills, until they can use for a whole year. Additionally, MP2 will allow consumers to decide on a fixed rate for one to two years and will not charge penalties if they terminate their account later.
Through this partnership, the company aims to make solar energy a viable and lucrative option to the residents of Texas. Although Texas is among the largest energy producing states in the U.S., electricity prices below the national average in the state have led to lackluster solar demand and adoption in the region. The only exception is of those areas where local incentives bring down the cost of solar electricity. Thus, with the latest offering, SolarCity aims to boost both the demand for clean energy in Texas and its own top line.
SolarCity is known for ingenious marketing ploys to shore up its revenues. It frequently rolls out programs to boost solar demand, simultaneously strengthening its presence.
Recently, it expanded the MyPower loan program offering to residents in New Mexico. (Read more: SolarCity Takes MyPower Loan Program to New Mexico) MyPower is a unique in the sense that the loan is paid off by the energy produced by the system. It caters to homeowners who are more interested in owning than leasing. Also, it recently entered into a partnership with Incapital to expand access to solar bonds to investors across the U.S. This will provide an additional source of capital for the company. (Read More: SolarCity-Incapital Team Up to Expand Access to Solar Bonds)
In Jan 2015, SolarCity signed a deal with investment bank JP Morgan Chase JPM to finance over $350 million in solar projects. In Nov 2014, SolarCity signed a deal with the giant retailer Wal-Mart Stores Inc. WMT for the installation of solar projects at Wal-Mart stores across 36 states within four years.
With the U.S. Energy Information Administration projecting solar consumption in the U.S. to surge 86% to 0.571 quadrillion btu in 2016 from the 2013 levels, these initiatives will likely serve the company well in the long term.
SolarCity currently has a Zacks Rank #3 (Hold). A better-ranked stock in the solar space is JA Solar Holdings Co., Ltd. JASO with a Zacks Rank #2 (Buy).
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