SolarCity looking for $201 million with its IPO

SolarCity filed to go public in April but only now do we get a glimpse into just how much money the solar installer is after as a filing revealed they’re aiming for an IPO of $201.25 million. That’s close to the $182.5 million figure solar thermal developer Brightsource was after before it pulled its IPO at the eleventh hour.

At the time Brightsource’s CEO John Woolard commented, “The analogy is, even if you’re Michael Phelps, if you’re swimming against a major current in the Bay of Fundy then it doesn’t matter. The macro forces can be too powerful.”

Ultimately Woolard decided that the share price they’d have to offer at just wasn’t worth it for a company that had a decent amount of cash in house and felt it could go to private markets if necessary. SolarCity obviously still feels public markets are worth a shot and fortunately it’s in the installation game right now, which is benefiting from falling solar PV prices and relies much more on tax incentives and credits.

The one thing I’ve always liked about SolarCity is that it’s pioneering the new financing game for solar installations, which means leasing the solar equipment or signing long term contracts (power purchase agreements) with its customers so that it doesn’t have to charge for installation. This really opens up the market and eliminates the biggest barrier to entry for customer in rooftop solar, which is the upfront capital costs of the equipment which are typically at least 20K for a home.

One interesting piece of data from the new filing had to do with the revenue breakdown between solar systems sales and operating leases. For all of 2011, SolarCity did about $23 million in lease income while in the first six months of 2012, it’s already close to $20 million. Solar system sales are growing even faster, though I still think that if leases can easily be securitized for Wall Street and bring borrowing costs down for SolarCity, solar leases could become an even better deal. SolarCity is still hemorrhaging a lot of money, $49 million in the first 6 months of 2012, but for those interested in top line growth, the first six months of 2012 look solid.

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Adam Lesser

Analyst Gigaom Research

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