Solar City Prepping for Scale
Board: Pencils Palace
This is an exciting announcement that shows the vision of SolarCity beyond merely installing solar panels on rooftops. SolarCity is becoming a vertically-integrated business -- covering the production of solar cells, installation processes, and installation/maintenance of solar panels -- to achieve a massive economy of scale with solar energy. As SolarCity's scale improves, the company can decrease costs and enter more states (and, potentially, countries) and attract hundreds of thousands of customers in the process.
This reiterates my enthusiasm for SolarCity as a long-term investment (10+ years, hopefully). SolarCity's goal is to make solar energy a viable non-subsidized form of energy to "outcompete fossil fuel grid power." The stock will be very volatile moving forward, of course, but the vision of Musk and the Rive brothers continues to blow me away. If anyone can execute this vision, it's these guys. I'm comfortable buckling in for the ride.
Here is the announcement on SolarCity's blog written by Elon Musk and the Rive brothers (emphasis added):
SolarCity has signed an agreement to acquire Silevo, a solar panel technology and manufacturing company whose modules have demonstrated a unique combination of high energy output and low cost. Our intent is to combine what we believe is fundamentally the best photovoltaic technology with massive economies of scale to achieve a breakthrough in the cost of solar power. Although no other acquisitions are currently being contemplated, SolarCity may acquire additional photovoltaics companies as needed to ensure clear technology leadership and we plan to grow internal engineering significantly.
We are in discussions with the state of New York to build the initial manufacturing plant, continuing a relationship developed by the Silevo team. At a targeted capacity greater than 1 GW within the next two years, it will be one of the single largest solar panel production plants in the world. This will be followed in subsequent years by one or more significantly larger plants at an order of magnitude greater annual production capacity.
Given that there is excess supplier capacity today, this may seem counter-intuitive to some who follow the solar industry. What we are trying to address is not the lay of the land today, where there are indeed too many suppliers, most of whom are producing relatively low photonic efficiency solar cells at uncompelling costs, but how we see the future developing. Without decisive action to lay the groundwork today, the massive volume of affordable, high efficiency panels needed for unsubsidized solar power to outcompete fossil fuel grid power simply will not be there when it is needed.
SolarCity was founded to accelerate mass adoption of sustainable energy. The sun, that highly convenient and free fusion reactor in the sky, radiates more energy to the Earth in a few hours than the entire human population consumes from all sources in a year. This means that solar panels, paired with batteries to enable power at night, can produce several orders of magnitude more electricity than is consumed by the entirety of human civilization. (emphasis added)
I am glad I am invested in this innovative business. The road will be bumpy but the vision is clear, and I wouldn't bet against Musk and the Rive brothers.