UPDATE: Read my column on SolarCity’s IPO and Rocky Hill Expansion and how it affects people in very different places on the economic ladder.
The CEO of SolarCity is heading to Rocky Hill for an expansion of Connecticut operations Thursday, hours after a tumultuous IPO that saw the company’s shares skyrocket from a disappointing opening price.
SolarCity Corp., of San Mateo, Calif., will boost its Connecticut staff by 15, to 60 people, and is moving to larger quarters in Rocky Hill from Wethersfield. At a 3 p.m. event Thursday, executives and Gov. Dannel P. Malloy declare that Connecticut is a stronghold for the fast-growing rooftop solar energy industry.
In some ways that’s true, as installations here and elsewhere are mushrooming, thanks in large part to state subsidies and other policies. But skies are anything but clear for a fledgling industry trying to make solar energy an economically viable alternative for the masses.
SolarCity (Nasdaq: SCTY) raised a net $85 million this in its initial public offering of 11.5 million shares at $8, far less than the $13 to $15 the company said last month it hoped to fetch. By midday Thursday, the first day of trading, shares had shot up above $12 — somewhat odd considering reports that the company couldn’t interest investors in the higher valuation as late as Tuesday.
Elon Musk, co-founder of PayPal and Tesla Motors, who now wants to send a person to Mars through his SpaceX venture, is the chairman and 28 percent owner of SolarCity, and is the cousin of CEO Lyndon Rive.
Through nine months of 2012, the company logged a net loss of $78 million on total revenue of $103 million. That’s deeper than a $57 million net loss in the first nine months of 2011, but installation sales are up sharply to $70 million, from $22 million.
Under the company’s typical model, shared by others in the industry, the host company or homeowner does not buy solar systems, but allows the company to use its rooftop. The host then buys energy at a price that SolarCity advertises as lower than the available price off the grid.
“Our business currently depends on the availability of rebates, tax credits and other financial incentives,” SolarCity said in a revised stock registration filing on Wednesday.
Without those rebates, would the model be able to compete with generated electricity, which has been falling in price in recent years? That’s the bet made by SolarCity’s investors.
The market is flooded with cheap solar materials made in China and other Asian nations, which is a two-edged sword. That’s driving down the cost of solar installations — panel prices are nearly six times lower than they were in 2006, SolarCity said.
But that’s hurting firms such as Specialized Technology Resources Inc. of Enfield, a publicly traded solar encapsulation materials maker. STR has seen its share prices and profits plummet over the last two years.