SolarCity Corp (SCTY) Drives U.S. Solar Lease, Solar Storage Segments

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SolarCity Corp (NASDAQ:SCTY) remains in a good position within the U.S. solar industry, according to experts. The company is a key leader and beneficiary in two major areas of the rapidly growing market: solar lease and solar storage.

General stats from the U.S. solar industry

According to Natureo Finance analyst Ingo Queiser, residential was the fastest growing segment of the photovoltaic (PV) solar market. New installations rose 44% year over year in the first none months. GTM Research suggests the U.S. market will have grown 27% this year and at a 30% compound annual growth rate until 2016.

During the third quarter, new PV installations in the U.S. added up to 930 megawatts. That’s a 35% increase year over year and a 20% increase quarter over quarter. The residential segment grew 46% year over year, while the utility segment rose 73% year over year. According to Queiser, the U.S. is on track to becoming the third biggest PV country this year with an estimated 13% market share, compared to an 11% share last year. China and Japan are the only two countries with bigger shares, and the U.S. would surpass Germany this year.

SolarCity and the solar lease industry

Within the U.S. solar industry, Queiser sees solar leasing as being one of the main growth drivers. He states that SolarCity Corp (NASDAQ:SCTY) “has become a major growth engine” for the residential segment of the market. He notes that in California and Arizona, which are key solar states, third-party owned systems made up 70% and 86%, respectively, of all residential PV units installed during the third quarter. He expects to see third-party owned systems continue driving the market and SolarCity to continue being the main driver of this segment.

SolarCity is the biggest solar lease provider in the U.S. It accounted for approximately 26% of new residential PV installations over the first nine months of the year. In third quarter alone, it had 32% of them. The company plans to target 500 megawatts of PV systems on residential rooftops in 2014. That’s an 80% increase over this year.

SolarCity pushes into solar storage

SolarCity Corp (NASDAQ:SCTY) is also a major player in the solar storage market, and the analyst sees the company as positioned very well because of its ties with automaker and electric battery maker Tesla Motors Inc (NASDAQ:TSLA).

SolarCity has launched a PV energy storage system for businesses. It uses solar energy storage technology designed and made by Tesla and is called the DemandLogic PV system. It is bundled with a PV generation system and will start being sold in 2014 through 10-year leasing agreements to buyers in California, Connecticut and Massachusetts. Buyers will make monthly payments rather than paying an upfront fee.

SolarCity to become a driver of solar storage

Queiser said because of SolarCity Corp (NASDAQ:SCTY)’s “distribution power” in residential and smaller commercial PV in the U.S., he thinks the company will become one of the main driving forces for distributed solar storage systems. He notes that SolarCity’s solar storage business started with the launch of its 5 kW residential storage systems last year and now includes commercial systems.

In a filing with the Securities and Exchange Commission in March, SolarCity said it had more than 395 “energy storage pilot projects under contract.” The analyst thinks this number could be much higher by now and that the greatest majority of these projects are in California and receiving subsidies from the company’s solar program, which covers approximately 25% of the cost of the system. The analysts said this, combined with the “battery procurement power” of Tesla Motors Inc (NASDAQ:TSLA), “can be passed on as attractive leasing rate to the PV storage customer and thus vitalize stationary storage demand.”

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