Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

The Silicon Valley solar installer SolarCity Corp. (SCTY - Snapshot Report) is diversifying into storage with its new offering. The company has plans to launch a battery storage device – DemandLogic – for commercial customers.

DemandLogic incorporating Tesla Motors Inc.’s (TSLA - Analyst Report) battery technology is capable of providing backup power lasting up to two hours during peak electricity usage or blackouts. The company’s storage systems will be available by the middle of next year in parts of California that includes the territories of PG&E Corp. (PCG - Analyst Report) and Southern California Edison, along with certain areas of Connecticut and Massachusetts.

The company has been working with Tesla on these batteries for more than three years. SolarCity is also testing these batteries on approximately 300 of its residential customers in California in a pilot program.

This battery storage system will help businesses to cut their utility bills during peak demand seasons. Large commercial clients including big hotels, data centers as well as other industrial customers have to pay high demand charges to the utilities.

The usual electric bills for commercial clients usually consist of two components – energy charges and demand charges. While energy charges are derived from the entire amount of energy consumed during a one-month billing cycle, demand charges are based on the peak electricity usage during a billing period. So companies utilizing less electricity can even incur high demand fees, which help utilities to recover its investments in power generation and transmission equipment.

Hence, the combination of solar with storage could prove to be an effective solution to both lower fees and increase green power usage. SolarCity is cleverly targeting markets where the utilities collect high demand fees.

The batteries will be installed at no upfront cost to the business owners signing 10-year service agreements. SolarCity expects the demand charge to go down by around 20%. SolarCity will not charge customers for the battery. Instead the company plans to offer it as a service for a monthly fee.

SolarCity’s commercial customers bring about 20% to 30% of its business. Well-known names among its client base include Wal-Mart Stores Inc. (WMT - Analyst Report), Walgreen Co. (WAG - Analyst Report), eBay Inc. (EBAY - Analyst Report) and Intel Corp (INTC - Analyst Report).

Backed by Tesla Motors founder Elon Musk, the SolarCity stock has rallied almost 342.5% since its first appearance in the stock market. The company has a market cap of $4.34 billion. Elon Musk owns about 73% of SolarCity's 78 million shares outstanding, while a relatively small proportion is entitled for the public.

SolarCity presently retains a Zacks Rank #3 (Hold).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%