SolarCity Corp Signs up for First Solar Groupon

SolarCity (NASDAQ: SCTY  ) has tried just about every customer acquisition strategy possible and today turned to Groupon (NASDAQ: GRPN  ) to acquire even more new customers. The company announced a $1 Groupon that would "save" consumers $400 on a solar installation.  

The Groupon says that SolarCity is offering a free consultation, site survey and proposal, custom design and installation, ongoing customer service, and savings. For someone who isn't familiar with solar, this may sound like a big deal, but is it?

Getting more communities to go solar will add value to SolarCity's shareholders. Source: SolarCity.

Finding new ways to buy customers
What SolarCity doesn't say is that what it is offering consumers through this Groupon is the same thing it offers every customer. Go to SolarCity.com, and you can get the same consultation and savings, and it won't even cost you a dollar.

The bigger story here is that Groupon is another way for SolarCity to acquire customers. Last year, it paid $120 million for Paramount Solar, essentially a solar telemarketer, to add to its sales capabilities, and it can now be found in Home Depot and Best Buy stores. The goal is to get as many contact points with customers as possible in an effort to get more people to go solar.

Workers installing a residential solar system. Source: SolarCity.

So far, so good, for that strategy. SolarCity is expecting to grow around 90% this year to 500-550 MW installed and will nearly double next year to 900 MW to 1 GW. That growth puts more solar assets in SolarCity's lease financing, but will something like Groupon add value?

Will Groupon add value?
For a partner like Groupon or Best Buy to add value, SolarCity needs to see operating (acquisition) costs fall and retained value per watt remain high while growing. Last year, SolarCity spent $188.4 million on operating expenses and added $306 million in contracted retained value, and the goal will be to increase the spread between those numbers long term. No individual partnership will increase that margin, but as SolarCity tests out new sales models and expands its footprint, I think the margin will expand.

A Groupon is a pretty cheap way to test a new marketing method, and for SolarCity, just getting a few headlines is an incremental value add. But this won't be a game-changer for shareholders, and the real value will come from keeping costs low to fend off competitors.

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Read/Post Comments (6) | Recommend This Article (5)

Comments from our Foolish Readers

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  • Report this Comment On May 28, 2014, at 4:59 PM, Oliver360 wrote:

    The title makes sense, but with First Solar also being a major player in the solar arena, you could have thought of a better title than that!

  • Report this Comment On May 29, 2014, at 11:23 AM, smolloy1010 wrote:

    This move by SolarCity is not about discounts, it's about capturing the attention of the diverse and massive audience that are Groupon members. Everyone should be doing solar that can. SolarCity has absolutely no cost out of your pocket, lower monthly utility bills, you are helping to use clean energy for the environment and you are providing new jobs.

    SolarCity will be $100 a share in 6 months. Bring on the naysayers!

  • Report this Comment On May 29, 2014, at 1:50 PM, mspacek wrote:

    "What SolarCity doesn't say is that what it is offering consumers through this Groupon is the same thing it offers every customer."

    Wrong! Someone needs to sharpen up their reading skills. The Groupon campaign is $1 for $400 towards home solar power, *plus* free installation. The $400 goes towards paying your power bill. You can't get that from SolarCity's website, AFAIK.

    From the horse's fine print mouth:

    http://www.groupon.com/deals/solarcity-1

    "Value will be applied towards SolarCity monthly electric services"

    Good til Aug 27th. Pretty sweet deal.

  • Report this Comment On May 29, 2014, at 1:56 PM, mspacek wrote:

    Er, I should say the groupon expires in just over 3 days, but once you buy it it's good til Aug 27th.

  • Report this Comment On May 29, 2014, at 5:25 PM, ronwiserinvestor wrote:

    "Pretty sweet deal" ? I don't think so. You're forfeiting the 30% federal tax credit worth anywhere from $3,500 to over $10,000 over to the leasing company on a rented system that in the end will cost you 2 to 3 times more than a purchased system in exchange for a $400 coupon toward your electric bill? LOL

    How long do you think consumers are going to fall for that gimmick ?

    Purchased systems that are financed with $0 down FHA Title 1 solar loans that offer tax deductible interest that let the consumer keep their incentives are going to rule this market moving forward.

    $100 a share ? In your dreams.

  • Report this Comment On May 30, 2014, at 2:57 PM, ronwiserinvestor wrote:

    Solar Home in California sells higher performance systems that include built in performance monitoring with much higher performance U.S. made solar panels versus the leasing/PPA company's Chinese made solar panels at nearly half the cost (thousands, even tens of thousands less) that a $0 down solar lease will cost you.

    So why all the excitement about a $400 coupon ?

    Shop around people, don't fall for gimmicks.

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