Solar photovoltaic installer SolarCity Corp. (SCTY - Snapshot Report) has now teamed up with the big-box retailer Best Buy Company, Inc. (BBY - Analyst Report) to make solar services readily available to customers. The shares of SolarCity gained 7.0% yesterday on the news.
With this partnership, SolarCity – the largest residential solar power provider in the U.S. – will place its sales representatives in about 60 Best Buy stores in Arizona, California, Hawaii, New York and Oregon. Through a website, bestbuysolarcity.com, the companies have listed the initial 52 stores, most of which are located in Arizona and California.
The new venture comes at a time of rapid expansion of solar in California as well as in the U.S. as a whole. Late last year, SolarCity outlined expansion plans in California to bring reliable and efficient solar power to the masses. The move would virtually double the company’s footprint in the state. SolarCity also indicated that the expansion will not only boost local economies and prove beneficial for the environment but also help the company to cut costs. This will be done by lessening drive times and increasing installation efficiency.
Though SolarCity is yet to file its fourth quarter 2013 results due to some accounting problems, with complete reports now expected by Mar 18, the preliminary numbers are indeed encouraging.
The company successfully installed a record 103 megawatt (MW) of panels in the fourth quarter 2013, up sharply from 48 MW a year ago. The customer count also expanded 13% sequentially. Notably, residential installations grew 130% year over year to 70 MW during the quarter. This brings 2013 total installations to 280 MW, above the company’s previous forecast of 278 MW. SolarCity also foresees 78 MW to 82 MW of panel installations for the first quarter of 2014 and reaffirmed its earlier projection of 475 MW to 525 MW for the year.
We note that California is one of the most proactive states when it comes to the wide uptake of renewable energy. California’s renewable energy policy, the Renewables Portfolio Standard (RPS), implicates that all utilities are required to source 33% of their retail electricity sales from renewables by 2020. At the same time, the state is also winding down its incentive program signaling how far solar power has moved toward the mainstream. Currently, the state generates about 20% of its electricity from renewable energy, most of which comes from hydropower. However, the California Public Utilities Commission expects the major power generation to come from solar in the future.
The solar industry rallied in 2013 following a difficult period since 2011. The U.S. Energy Information Administration (EIA) estimates that U.S solar demand increased more than 32% in 2013. For 2014, the EIA projects that U.S. solar energy consumption will rise by roughly 35%. The expected increase in demand is likely to fuel top-line growth at the solar manufacturers.
Also, countries worldwide are increasingly relying on solar power to generate clean energy. Stringent environmental legislations on greenhouse gas emissions have also proved to be a boon for the solar sector.
Notably, 2013 showed astounding scale in the Chinese market, overtaking longtime leader Germany. This year, solar developers like Canadian Solar Inc. (CSIQ - Analyst Report) and JinkoSolar Holding Co., Ltd. (JKS - Snapshot Report) are expected to install record capacity as a booming Chinese market drives growth.
SolarCity is one of several companies under real life ‘Iron Man’ Elon Musk’s umbrella. The company currently carries a Zacks Rank #2 (Buy).