SolarCity Corp. (SCTY) reduces the upfront costs of solar energy by leasing its own equipment to businesses and consumers, where this new solar leasing business takes away the need to invest in expensive equipment and reduces overall energy costs, says Ben Kallo, Senior Analyst at Robert W. Baird & Co.
“This gives the consumer the advantage of the solar power, which is 10% to 15% cheaper than regular electricity, and they don’t have to invest so heavily in the hardware. That is an easy model that is getting some traction. That is probably the biggest growth area we are seeing right now,” Kallo said.
Kallo says downstream companies like SolarCity also benefit from the lower costs of polysilicon and module production. He says alternative energy company performance ultimately depends on cost, and the reduced cost increases the potential for increased adoption.
“Prices have dropped precipitously really because of oversupply, but what that means is it’s actually good for the solar market, because as costs come down for the whole system it makes more cost competitive with fossil fuel generation,” Kallo said. “Those downstream people — the First Solar (FSLR), SunPower (SPWR), SolarCity — they’re actually going out there building out projects, actually benefit from oversupply that’s occurring in the module side of the business.”
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