SolarCity (SCTY.DL) continues to expand its operations across the more radiant parts of the country, as well as over corporate America. Hewlett-Packard Company (HPQ 0.86%), recently had 4,000 solar panels installed by SolarCity at its headquarters in Palo Alto, California, a project that will help HP cover about a fifth of its power usage for the facility.
The effort is part of a broader plan by HP to reduce its own emissions of greenhouse gases, and to reduce the company's use of water in its generation of electricity. By deploying solar power, the company should save the state of California 130 million gallons of fresh water over the next twenty years. As solar power is viewed more and more as part of the solution to California's water problems, it will be further embraced by local companies and governments.
SolarCity is currently serving clients like eBay, Intel, and Wal-Mart (WMT 0.18%). The largest retail business in the world, Wal-Mart is becoming a huge consumer of solar energy; the company's professed long-range goal is to be completely powered by renewable energy.
SolarCity will be offering Wal-Mart solar-powered electricity at a slew of facilities in a number of states. The retailer will benefit from prices below the traditional utility rates as well as from price stability in its energy use.
Schools are also turning to solar energy with the aid of SolarCity. In Chico, California, the school district will be using SolarCity's low-cost, pollution free energy at a fixed rate, while additionally avoiding the up-front costs of installation. Over the next 20 years, 85 percent of the school district's energy needs will be provided by solar generated electricity, saving the school district $2.4 million.
SolarCity has also recently expanded into Nevada, the state with the most direct sunlight. The firm is already working on over 100 projects for housing communities in the state, and is partnering with Shea Homes to do so.
SolarCity and Shea Homes are providing solar power to residents. Source: Solarcity
Looking at the recent quarterly report, revenue from the company's first quarter of this year grew 11% from the previous year's quarter, easily beating forecasts. SolarCity has also turned more optimistic about its future, now believing that it can deploy more megawatts than previously thought. The company intends to double its energy output in 2015 from 2014, producing a potential total of 1,000 megawatts.
Since it is in its early stage of development, SolarCity is yet to show profits. Nonetheless, the company's loss from its most recent quarter declined to 26 cents a share from 54 cents a share a year ago.
Right now, the emphasis is on revenue expansion. Company CEO Lyndon Rive recently touted SolarCity's 98% growth rate, and declared that SolarCity will continue to broaden its operations through investing in sales and marketing.
Indeed, SolarCity is a disruptive force that is upending the way electricity is bought and sold. The company currently is enjoying a steady stream of cash flows from its contracts, growth in revenues, and stands ready to continue its expansion into the domestic market.
The problem with investing in SolarCity is that it is difficult to put a value on the company's stock, the price of which will obviously be volatile until we get a stronger picture of future company earnings. One strategy would be to buy small quantities of the stock over time so as to mitigate risk. By doing so, investors can be in the game and benefit from the company's tremendous potential, while being somewhat protected from the stock's inevitable downturns.
Given the company's growth and its outlook from the most recent quarter, and given the growth of solar energy generally, I believe that, if bought gradually and for the long term, SolarCity will offer significant rewards over the next decade.
