Sorry, But Your SolarCity Solar Panel Kit Isn't Saving The World

SolarCity Corporation has big plans – but they're tiny compared to other plans.

Jul 13, 2014 at 10:10AM

Solar Home

Source: SolarCity Corporation 

SolarCity Corporation (NASDAQ:SCTY) and other rooftop solar companies are soaring on record sales. But is that shining status symbol on top of your roof really doing the most for Mother Nature? Here's what you need to know.

Take it Outside
If you're like many Americans today, you're increasingly concerned with the quality of your food. But do you head to the countryside, buy a 10-acre plot, and plant enough kale, kumquats, and carrots to keep your family fed year-round? No. You go to Whole Foods Market and pay up for some organic arugula.

The same might be said for SolarCity Corporation's rooftop solar panel kits. While your system might serve as a glossy household accessory advertising your environmentalism, there's an alternative that might ultimately be the greener option for the greater good: utility-scale solar.

Big Solar
As solar costs keep dropping, utilities have quickly come around to the idea that solar can and should be a part of their energy portfolio.

In 2010, residential, commercial, and utility solar capacity was almost exactly even. But utility-scale generation has soared over the past few years. In 2013, utilities installed more than 50% of all new capacity. While that's remarkable in and of itself, it's important to note that 2013 solar installations increased our nation's total solar capacity by 66% to over 10,500 megawatts. That's unprecedented growth.

Residential solar isn't without its own records. The number of rooftop solar panel kits currently stands at around 480,000 , compared to just 550 existing, under construction, or planned projects 1 megawatt and larger. SolarCity Corporation lays claim to a massive 25% of all rooftop solar panel kit installations. That's equal to the market share of its next 14 competitors combined, an impressive feat considering its relatively capital-intensive in-house operations. Currently, the company has just 45 operation centers in 15 states (plus Washington, D.C ). But as SolarCity's website notes:

We're going to keep growing and making clean, more affordable energy available to even more homeowners than ever. You can be next.

Scty States

Source: SolarCity Corporation 

SolarCity Corporation isn't going to let utilities steal the solar show. Although the pipeline for utility-scale solar projects is massive (26,000 megawatts currently under construction or development), SolarCity Corporation Chief Executive Officer Lyndon Rive likes big numbers, too.

Even though Rive's business model is built on mini-systems, he understands the importance of scale. Rive has set SolarCity Corporation a goal of one million solar panel kits installed by 2018.

One million is a big number. But in reality, it doesn't mean much for America's energy infrastructure. 1,000,000 customers translates to around 6,000 megawatts, just 25% of all currently proposed or under construction utility-scale solar projects.

If the relative insignificance of SolarCity's aspirations still isn't sinking in, consider this: Between May 2014 and December 2014, utilities will install 1,728 megawatts of large-scale solar. In other words, utilities will install more solar capacity in eight months than SolarCity has since it was founded in 2006.

Scty Mw Deployed

Source: SolarCity Corporation; Right-side axis displays cumulative MW deployed 

It's All About the Money
Utilities do it cheaper. According to the Solar Energy Industries Association, electricity from an average residential solar kit costs $3.73 per DC Watt, while utility-scale solar clocks in at less than half that amount: $1.77.

The massive cost difference comes from two main sources: modules and direct labor. And while module prices will continue to decline for both rooftop and utility-scale systems, SolarCity Corporation will be hard-pressed to drop its labor costs on tiny solar panel kits to the same levels as those of a sizable solar farm.

There's a place for residential systems, and rooftop solar panel kits offer an unprecedented opportunity for gridless electricity generation anywhere the sun shines. But if you think SolarCity Corporation is on the cusp of changing our energy infrastructure, you're better off giving credit to utilities going green.

The Solar Companion
If you're an energy investor, it's important to consider the lucrative "solar companion" opportunities that also exist. You already know record natural gas production is changing the lives of millions of Americans. But what you probably haven't heard is that the IRS is encouraging investors to support our growing energy renaissance, offering you a tax loophole to invest in some of America's greatest energy companies. 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.

John Mackey, co-CEO of Whole Foods Market, is a member of The Motley Fool's board of directors. Justin Loiseau owns shares of Whole Foods Market. The Motley Fool recommends SolarCity and Whole Foods Market. The Motley Fool owns shares of SolarCity and Whole Foods Market. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

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