SolarCity (NASDAQ: SCTY) and SunPower (NASDAQ:SPWR) are at the forefront of the rooftop solar movement that's increasingly taking shape in this country. However, solar power only works when the sun shines. That's why hydrogen cell maker Plug Power (NASDAQ:PLUG) could be the missing link for wider rooftop solar adoption.
When the sun is shining
SolarCity is planning on having over a gigawatt of rooftop solar installed by the end of this year. SunPower, which is also a large solar panel maker, isn't as far along in its rooftop solar efforts. At the end of the first quarter, SunPower had less than 200 megawatts of solar panels deployed and the first quarter installs were a mere 11 megawatts.
That may not be as bad as it sounds, however, because SolarCity was able to double its install run rate between 2012 and 2013. It went from installing 50 megawatts to over 100 megawatts in the fourth quarter, year over year. That said, getting homeowners and businesses to buy into solar still faces some big challenges.
A big one is that solar power only works when the sun shines. Normally that means more power is produced during the day than is needed and no power is generated at night. That's a problem if you want to cut yourself from the power grid. And while batteries can store some of that power, a large battery storage system is an expensive proposition right now.
When the sun ain't out
Even if excess power is stored, it may not be enough to provide for a full night of use. Or be enough to handle a rainy day when little if any solar power is produced. What then? That's where an interesting power backup effort by a cell phone company comes into play. Sprint is installing hydrogen power cells as backup power sources at some 30% of its cell towers.
Publicly traded Plug Power is a leader in the hydrogen power space, only its hydrogen power cells are being used to power lift vehicles in factories and distribution centers. These are vehicles that used to be powered by batteries. The company has some big name converts, too, including the world's largest retailer, Wal-Mart. A single order from this retail Goliath will increase Plug Power's installed base by more than a third. And it gives this fuel cell pioneer's image a huge boost.
But step back and think about what Plug Power's technology is doing in the lift market—it's displacing batteries. And Sprint is using fuel cells to replace generator power back-ups. Put the two together and you can see where fuel cells could be viewed as a way to provide power at night for those with rooftop solar installations. That would allow SolarCity and SunPower customers to completely cut from the grid.
I wish I could say that I thought of this little gem of an idea, but I didn't. Japanese households have been pairing rooftop solar and hydrogen fuel cell technologies since their country shuttered its nuclear power fleet after Fukushima. However, like Godzilla and anime, this is one cool trend that we might soon jump on in the United States.
Although SunPower is back in the black after a stretch of red ink, neither SolarCity nor Plug Power are making money. Sun Power has the benefit of a much more diversified business model that includes a global footprint and solar panel making in addition to rooftop solar installations. However, as solar and hydrogen fuel cell technology matures, watch closely to see how they interact.