Which of Elon Musk’s cleantech ventures is hotter? Last week it was Tesla, with a big first-quarter earnings report. Today, it looks like SolarCity gets the nod.
The solar company unveiled a deal with Wall Street heavy Goldman Sachs that pulls together a half-billion dollars to finance rooftop installations. The announcement gave SolarCity’s stock a jolt, sending it up 10 percent in midday trading to around $35. SolarCity, which lost $31 million in the first quarter this year, went public at $8 in December.
“The Goldman lease financing will make affordable solar electricity available to more types of homeowners and organizations,” Jimmy Chuang, SolarCity’s vice president of structured finance, said in a statement. “We expect to be able to expand our offering to a broader customer base by lowering the credit requirements even further in future financings.”
In its earnings report earlier this week, SolarCity said that it expected to install about 250 MW of solar capacity this calendar year. As Greentech Media noted today, the Goldman Sachs deal won’t likely bump that up much since SolarCity is “delivery-constrained” – that is, it is installing as much solar as it can. But SolarCity and Goldman Sachs said that down the road, “the financing can make it easier to fund projects for schools, municipalities and other organizations that are not publicly rated.”
Goldman Sachs and other investors – SolarCity has done business with U.S. Bancorp, Google and Honda, among others – are drawn to SolarCity’s projects by a 30 percent tax credit on the value of systems.
“We are excited about the opportunity in distributed solar, which has the potential to both lower energy costs and create jobs,” said Stuart Bernstein, global head of clean technology and renewables at Goldman Sachs. “Our firm has set a target of $40 billion in financings and investments in renewable energy over the next decade, and we believe SolarCity’s range of distributed solar solutions targeting a wider customer base will help us move toward a low carbon energy future.”
SolarCity was founded in 2006, a couple of years after Musk suggested the enterprise to cousins Peter and Lyndon Rive while on a trip to Burning Man, as the story goes. Musk is chairman of the company and owns around a quarter of its stock. Although he isn’t involved in the day-to-day operations, his cleantech-wizard sheen clearly helps SolarCity, so much so that the Wall Street Journal’s Liam Denning suggested this week that “Musk can cause people to act irrationally – even in the supposedly cold, harsh world of the stock market.”