MIT Technology Weekend Reads: Solar City

June 25, 2016 Weekend Reads: Solar City In 2006, brothers Pete and Lyndon Rive founded SolarCity with their cousin Elon Musk, who is better known as Tesla’s CEO. SolarCity, which is now the country’s largest provider of rooftop solar panels, is in the news again because Musk wants Tesla to buy it. The proposed deal has a lot of folks scratching their heads for a number of reasons, not least of which is that the two companies had combined losses of $1.6 billion in 2015. This weekend we look back on stories about SolarCity’s past success and future challenges. Tesla-SolarCity Success Depends on Battery Technology That Doesn’t Yet ExistOn Wednesday, we reported that a prosperous coupling of Tesla and SolarCity relies on a currently nonexistent energy storage system. Tesla is investing in a large factory for lithium-ion batteries, but it seems that it will be years still before the synergy between electric cars and solar power will have a large impact on energy. Battles Over Net Metering Cloud the Future of Rooftop Solar One advantage for residential owners of solar panels is the payment they receive when excessive energy is produced and sent back to the grid. Even Lyndon Rive says that without this scenario—called net metering—residential solar doesn’t make much financial sense for consumers. But Nevada and other states are backing down from net metering, as we reported in January. That doesn’t bode well for SolarCity. 10 Breakthrough Technologies: SolarCity’s GigafactoryUntil now, SolarCity’s business model focused on financing and installing solar panel systems, relying mainly on Chinese manufacturers for the actual panels. That is all set to change with its new so-called gigafactory in Buffalo, New York, which was one of our 10 Breakthrough Technologies in 2015. It’s a bold move, and only time will tell if it pays off for the still unprofitable company. Paying for Solar PowerSince Buffalo is one of America’s cloudier cities, it seems like an odd location to build a giant solar-panel factory. Yet that’s what SolarCity decided to do, in no small part because New York picked up the $750 million price tag for building and equipping the facility. Last year we reported on this issue and a larger, looming question: is paying for solar power sustainable? Innovators Under 35: Lyndon RiveSolar City’s cofounder and CEO Lyndon Rive was one of our Innovators Under 35 in 2013. His company’s program for leasing solar systems helped reduce initial costs for consumers, driving sales and making his company the current leader in rooftop solar installations in the U.S. Why SolarCity Is Succeeding in a Difficult Solar IndustrySolar panels contribute only about 20 percent of the total cost of a solar system. Most of the money goes to companies, like SolarCity, that install the panels and connect them to the grid. Back in 2012, right when they filed for an IPO, we reported that SolarCity’s success might be partly due to staying out of solar-panel manufacturing. Ironically, that’s the market it’s breaking into with its new gigafactory.