SolarCity Corp (NASDAQ:SCTY) has been the undisputed leader in the residential solar market with 36% market share. In fact, its market share is higher than the combined share of the next 50 rivals. However, its success in the residential solar market has attracted a lot of competitors, and some of them are growing faster than SolarCity.
SolarCity’s biggest threat is a three-year-old company
For instance, SunPower Corporation (NASDAQ:SPWR) and NRG Energy In (NYSE:NRG) have also entered the residential panel installation market. But the biggest threat to SolarCity’s market dominance is Vivint Solar In (NYSE:VSLR). Vivint CEO Greg Butterfield said at the company’s Q3 earnings call that the Provo, Utah-based company has gone from zero to 15% market share in just three years.
Vivint Solar installed 49MW of panels during the third quarter, up a whopping 196% from the same quarter last year. By comparison, SolarCity installed 137MW of panels in the same period, a growth of 77% from last year. In the first quarter of 2013, Vivint Solar was only 22% the size of SolarCity. But its size has now grown to 36% of the San Mateo-based company.
Vivint is still a very young and small company. But its stupendous growth rate shows that it won’t remain a small player for long. The company’s third-quarter revenue surged 266% to $8.3 million. Butterfield said that Vivint Solar will also be offering loans, which could boost installations. The overall solar industry is growing at annual rate of 37%, compared to 264% CAGR for Vivint Solar.
Vivint Solar’s retained value slightly higher than SolarCity
Vivint Solar’s cost structure wasn’t competitive with SolarCity at the beginning of this year. But at the end of Q3, its per watt cost of $3.12 was just 22 cents higher than that of SolarCity. What’s more, the Provo-based company’s retained value in the latest quarter came in at $1.82 per watt, better than $1.79 per watt for SolarCity.
Vivint Solar management continues to expand its business. The company has opened 23 sales offices in the last year. It is opening another 20 sales offices in existing as well as new markets. SolarCity needs to watch Vivint very closely.