SolarCity Corp Set For Long-Term Dominance In Residential Solar

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SolarCity Corp (NASDAQ:SCTY)’s management has proved time and again that they can constantly innovate and stay ahead of the curve. The company’s recent solar bond and loan program are evidence of the management’s commitment. The acquisition of Silevo is another smart move that will give the company a huge advantage over rivals.

SolarCity’s strategy to crush the competition

Meanwhile, SolarCity has joined hands with home builders to include solar panels on houses they build. The San Mateo-based company currently has 36% share in the residential solar market. The company already dominates the residential solar market. But more players such as Edison International (NYSE:EIX) are getting in the market, which leads to greater competition. The Elon Musk-backed company’s strategy to join hands with home builders would help it dominate the market in the long-run.

Last year, about 600,000 new homes were built, mostly by heavyweights like PulteGroup, Inc. (NYSE:PHM) and Toll Brothers Inc (NYSE:TOL). The solar installer has signed agreements with both of them. Other builders are also altering their construction plans to make sure that the houses they build are solar ready. Placing solar panels on the rooftop doesn’t require massive changes to the blueprint.

Mass adoption of rooftop solar

But it’s a remarkable trend. That’s because installing panels on existing homes is a house-by-house matter. Each installation faces its own permitting issues, uncertainties and grid connection efforts. Dealing with home builders simplifies that process drastically, says Reuben Brewer of The Motley Fool. New homes are built to handle rooftop installations. What’s more, the homes are usually standardized, so permits won’t be a big issue.

The home builder is making the big sale. But the financial transaction is still between SolarCity and customers. It makes the sales process easier. For a buyer willing to spend $300,000 on a house, a solar panel with no upfront cost that helps reduce electricity costs is an enticing deal. These shifts could mark the beginning of the mass adoption of residential solar.

SolarCity shares inched up 0.28% to $54.25 in pre-market trading Monday.

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