How SolarCity and SunPower Are Revolutionizing Energy

Power in the energy industry is shifting from massive companies to homeowner, who can now produce power on their own.

Jul 2, 2014 at 1:04PM

Since Thomas Edison invented the light bulb and built the first electric grid in Manhattan there's been little change in the way we generate and distribute electricity around the world. Utilities build massive power generators that create electricity and it's sent through transmission and distribution lines into your home where you pay a price that you can't negotiate for the energy you consume.

How utilities are regulated and the amount of choice you have depends on where you live, but consumers are still beholden to a utility and have little choice in how they get electricity or where it comes from.

That's what makes rooftop solar power so revolutionary and so scary for utilities as we know them. Today, consumers are beginning to have energy choices, transferring power from utilities to homeowners. They can install solar panels to generate electricity, store energy for later use, and even charge a vehicle all without interacting with the grid. That's something that was nearly impossible even a decade ago but today it's not only possible, but economical for millions of Americans and many millions more the world over.

Spwr Residential New Home Community

Residential solar communities like the one above are popping up around the country. Source: SunPower.

The power belongs to YOU
As recently as 2007, it was incredibly expensive for a homeowner to put solar panels up and generate their own electricity. An installation may have cost over $50,000 and the power generated cost much more than the utility.

But that's when Sunrun began offering solar leases, a business model that put the initial cost on the leaseholder and allowed homeowners to pay for their solar-power system over 20 years. Soon, the business model spread and SolarCity (NASDAQ:SCTY) is now the largest lease company and panel making giant SunPower (NASDAQ:SPWR) has joined the business as well. GTM Research predicts that solar leases will account for 68% of the projected 1.3 gigawatts of residential solar systems installed in the U.S. this year.

Scty Installers

SolarCity has been the most successful in expanding its residential solar installations. Source: SolarCity.

Leases wouldn't be viable if the power generated from a home wasn't cost effective, which is why SolarCity, SunPower, Sunrun, and others can offer solar for $0 down and a lower cost of electricity than the grid in some of the country. As costs fall further, homeowners will have even more choice, like whether they want to pay cash, get a loan, or design their system into the roof itself.

Beyond financing, storage is the next stage of development and it makes it possible for consumers to go without the grid. SolarCity's sister company Tesla Motors (NASDAQ:TSLA) is earmarking a large portion of its gigafactory for energy storage with sights set on dominating the market. SolarCity is already offering Tesla batteries to consumers and SunPower is now installing them in three test KB Home developments.

What's key in the cost reduction of solar is the increase in financing available, and that energy storage makes solar energy a choice for homeowners. If you live in a sunny or high cost energy state, it could even save you money.

Spwr Residential Close Up

Source: SunPower.

Why utilities are frightened by solar
Giving consumers choices about where they get energy from has utilities around the country frightened about their future. Utilities generate rates of return (often guaranteed) on the assets they have in place and if more consumers put up solar energy it limits the need for existing and new capacity. In other words, they'll shrink rather than grow each year.

Utilities like APS in Arizona are fighting solar by charging customers to "net meter" or sell extra electricity back to the grid during the day. But they see storage on the horizon and the potential of consumers and communities reducing demand without net metering, or even cutting the cord of the grid someday.

The solar revolution is here
Revolutionary changes in energy don't happen often but we're watching one take place in the solar industry. A big disruptive force is that solar energy consumers can create their own solar-power systems and store energy for later use.

SolarCity and SunPower are leading the charge from the solar side and Tesla Motors is a surprisingly big player with its gigafactory. These three will be leading the revolution and challenging the status quo along the way.

Buy into a domestic energy boom
Energy imports are falling and solar energy isn't the only domestic energy boom taking place. The good news is that the government is giving you tax breaks to invest in the industry. Take advantage of this profitable opportunity by grabbing your brand-new special report, "The IRS Is Daring You to Make This Investment Now!," and you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.

Travis Hoium manages an account that owns shares of SunPower and personally owns shares and options in SunPower. The Motley Fool recommends SolarCity and Tesla Motors. The Motley Fool owns shares of SolarCity and Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers