Solar energy giant steps into NH market
SolarCity, nation’s largest installer of residential systems, to open Manchester office
SolarCity – the nation’s largest installer of residential solar energy systems – is opening an office in Manchester and will be hiring as many as 100 people, adding even more impetus to the growing use of alternative energy by New Hampshire homeowners.
The rapidly growing California company has $4.5 billion in assets and offices in 16 other states, including Massachusetts.
What makes SolarCity different is that it doesn’t sell the solar panels to homeowners. It owns them, maintains them and either leases them by the month or sells the power the panels produce at a fixed rate over a long-term contract, usually 20 to 30 years.
That scheme has led to the company’s rapid growth since its founding in 2006, when Elon Musk, a founder of PayPal Inc. and CEO of Tesla Motors and Space X, suggested the idea to his cousins, Peter and Lyndon Rive.
Since then, revenue has doubled nearly every year. In 2014, the company reported $173.6 million in sales. In 2010, sales were under $10 million. At the end of last year, the company employed some 9,000 full-time employees.
In the last three years since the company began operations in Massachusetts, the number of employees have increased tenfold, to about 450. Over the past year, it has expanded from one to seven offices, said Leon “Lee” Keshishian, the firm’s East Coast vice president.
“Our growth has been exponential,” he said. “Hopefully that will happen here.”
That growth has translated into an unprofitable company, at least on paper. The company lost $56 million last year and $293 million over the last year, though it has plenty of cash – over $500 million.
Shaun Chapman, the company’s senior policy director, cheerfully explains the paradox. Accounting rules require the company to count the full cost of installing the solar panels, but only the first year of revenue from power sales or leases is counted, not the revenue that's common over the life of the agreement. Those revenues are dwarfed because the number of installations keeps increasing.
“If we stopped installing, our profits would be incredible,” Chapman said. That won’t happen anytime soon, since less than 1 percent of homes use solar energy and the price of solar systems keeps falling.
First, there has been a drop in the cost of solar panels, said Keshishian, but, more importantly, there has been the falling cost of installation. Part of that is due to the economy of scale, which allows for cheaper parts and better training.
In addition, SolarCity bought technology off the rack when it acquired Zep Solar at the end of 2013. The technology enables installers to snap together a solar panel “like Legos,” said Keshishian.
Indeed Craig Elis, a Keene resident who is the regional operations manager working out of the Springfield, Mass. office, says that he now installs two 7-megawatt panels in a day. Three years ago it took three days to install one of them, he said.
The company hopes to drive down costs even more with the acquisition of Silevo in the fall of 2014, enabling it to build a plant to build its own solar panels in Buffalo, in conjunction with the State University of New York. That would give the company an alternative to acquiring most of the panels from China, letting it avoid shipping costs and some recently imposed tariffs. The proximity of New Hampshire to Buffalo is another reason to expand in the Granite State, said the company officials.
SolarCity is currently looking for a 15,000-square-foot facility around Manchester, said Keshishian, and plans to service homes in southern New Hampshire, taking sales calls now to schedule installations starting in June, primarily to Eversource and Unitil customers.
It is currently advertising to hire 75 to 100 carpenters, electricians and salespeople. While the company wouldn’t estimate the amount of its investment in the state, it did say that it generally sinks $10,000 into equipping, hiring and training a new employee.
SolarCity is something of a Walmart coming into a small town. Currently, the New Hampshire solar industry is pretty much homegrown and considerably smaller, and primarily sells a solar system with financing, helped by various government rebates.
“We strongly feel that people should own their power,” said Dan Clapp, who manages the Exeter plant for ReVision Energy. ReVision, a Maine company that employs 30 people in the Granite State, is one of the biggest solar installers in the state.
But those government programs are in jeopardy. The NH House passed a budget that would raid the state’s Renewable Energy Fund, which provides rebates for solar installations and the like, though it’s not clear whether that raid will remain in the final budget.
SolarCity also has a new program, called MyPower, which sells systems through financing to homeowners, allowing them to take advantage of such rebates. But the company will not be rolling out that program in New Hampshire, partially because it’s new, and partially because of the “volatile” nature of the credits in the state, said Chapman.
Is ReVision worried about SolarCity coming to town?
“Yeah, I’m worried if I choose to look at it negatively,” said Clapp. “But I choose to look at it positively. They will help market solar to the state, and people are going to look for the local option.”