SolarCity: the middle reaches of the gambling industry

Polaris solar PV net news: while many PV companies to identify industry trends, shifting from component makers power station operators, PV-rental model creators, Ellen Thomas g (ElonMusk) Sun City, owned by the company (hereafter referred to as SolarCity), but gambling industry chain the middle market.

On June 19, following 1 day ago-musk founded the electric-car maker Tesla announced that Ellen spend $ 2 billion to $ 5 billion to create the world’s largest battery plant, SolarCity said in a statement that it would invest $ 350 million, buy solar panel manufacturers Cylon power (Silevo), and plans to establish a 1GW solar components plant.

As we all know, global two-thirds PV module production capacity in China, but in recent years, constituted by solar cell and solar module production encountered problems such as overcapacity in the middle reaches of the industrial chain, has gone through two years of shuffling, has just ushered in the dawn, but the industry has noted that trend of competition in the industry is inevitable. SolarCity choice enters at this time, is to improve the luster of its own industrial chain lift, or shake the capital foundations of redundant failure?

Reduced cost or purchase intention

From its founding in 2006, and SolarCity make an EPC, namely, the design, procurement and construction, but the next 1-2 years, earnings unimpressive. Until 2008, SolarCity and create a solar rooftop leasing operations business model (PPA). In early 2009, SolarCity announced cooperation with famous FirstSolar PV module manufacturer, since the beginning of this track.

After 2011, SolarCity survived the financial crisis with a unique business model that gained a lot of financial capital investment in its rental model, began doubling performance every year not only growing rapidly, United States Army, Procter and Gamble Company, Wal-Mart and other big customers and 110,000 residential rooftop photovoltaic service contracts in the Pocket. As the plate becomes bigger, SolarCity begins with the relatively low price of the Chinese PV module suppliers.

Meanwhile, in order to control cost, SolarCity also began his road to mergers and acquisitions. But with a number of emerging technology companies, the acquisition of this company is not much. Only in September 2013, for $ 120 million takeover of a direct selling company ParamountEnergySolutionLLC, and in October that year for $ 158 million takeover of a maker of stents, ZepSolar.

In its ZepSolar acquisition announcement, one intriguing – in Australia, and Germany, and Japan and the United Kingdom marketing and sales of ZepSolar products. That said, SolarCity has not only left the selection of component manufacturers as a way to reduce costs, and looking forward to using this asset to expand international market, and this acquisition component factory, had once again proved this point.

Tech + financial continues to rage

But the revenue is not an SolarCity gets continuously and steadily for the sole purpose of, analyzing it many of the moves in the near future, will be found to extend SolarCity has always been the search for high-tech industrialization and the pursuit of financial innovation.

SolarCity Cylon power of mergers and acquisitions, and its main products are highly efficient heterogeneous crystal of N-type single crystal silicon solar cells (HIT). N-type monocrystalline cell is like a Tesla battery industry, high technology content, fewer competitors. According to the report, at least in August 2013, the company has achieved mass production conversion efficiencies exceeding 21% of n-type high efficiency solar cells.

And current industry mainstream is, polycrystalline silicon cost less, over the next few years, Silicon will still hold a comparative advantage in the marketplace, even has a preference for single-crystal silicon United States market was no exception. So, SolarCity into the Silicon market is obviously a very bold scientific and technological endeavor. Once this attempt to succeed, SolarCity received will not only be a reputation as a technology leader, low cost products, there will be new products and business models in the solar PV market to win more fans.

Next, SolarCity is using the power of fans using implicit in consumer contracts in the long term and stable future earnings and gain more investors of all ages, from asset management to the perfect change of capital operation.

In fact, the management style that’s SolarCity is commendable. Following last year’s successful offering of $ 54.4 million at the end of the solar asset-backed bonds, and become the world’s first photovoltaic asset securitization, on July 9, it is posted to the website announcement said, will be carried out jointly with the e-commerce site Groupon PV group-buying business. Short-term see, move of directly effect is using electric commercial channel quickly increased user number, achieved SolarCity proposed of 2018 years 1 million households of target, to this increased continues to obtained financing of chips, to in support policy adjustment and market growth slowed zhiqian gets as more of market resources, thus formed constantly copy, and scroll increments of benign cycle, for future created more big of cash flow lay based.

But adventure means risk. SolarCity may face the greatest challenges of the future, is the transformation of Silicon from the laboratory to the commercial. It is reported that at present, n-type single-crystal silicon cell can still be used as product at the laboratory stage, even in mass production, I believe that size is also smaller. 1 GW production capacity target and SolarCity, is close to the world’s 10th largest PV maker Trina solar capacity levels.

In addition, after realizing industrialization of new products will be accepted by the market are still in doubt. If Silicon prices still high, SolarCity customer costs will rise. But also because it has not yet been market tested, how future maintenance after sale is still difficult to judge. But no matter how the prospect that any new products will be put on the market for some time consuming investors to greater human and financial resources.

Chinese enterprise’s urgent need for transformation

SolarCity’s move, Chinese enterprises should also attract attention.

United States has traditionally been a Chinese tradition of PV module exports markets. Large-scale implementation of PV in the EU “double reverse” after China United States PV set up export ratio does not fall but rise, has fallen from 10% in 2012, rising to around 19% of early 2014. Popular, mainly due to low price advantage of PV modules in China.

But on June 3, 2014, the United States Commerce Department said preliminary determination that Chinese exports to the United States of crystalline silicon photovoltaic products to make excessive government subsidies and imposed tariffs of between 18.56% and 35.21%, if in accordance with this standard, photovoltaic products in China’s price advantage will be gone. From the performance point of view, Chinese companies to export technical content is not very prominent in polycrystalline silicon photovoltaic products, once the cost advantage, it will be difficult to compete with future of SolarCity.

So, China enterprise not only needs full using WTO rules, active should abroad trade relief survey and the trade barriers, also should change past too focused on achieved scale economic and low cost competition advantage of operating ideas, through big strength of funds inputs and technology innovation, upgrade PV products of technology competitiveness, and learned using financial means, innovation financing mode, formed capital and financial capital of mutual promoting, and benign cycle. (The author is Associate Professor, school of international business and Economics and finance)

Original title: SolarCity: the middle reaches of the gambling industry

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