Solar Insights: SolarCity sets prices for IPO

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US renewable energy retailer SolarCity this week finally unveiled the details of its long awaited IPO, a listing that will be watched with keen interest by the beleaguered listed clean-tech sector, hoping to finally gain some traction with investors.

In October, we wrote about SolarCity’s business model sets out to prove that there is money to be made in solar – at least downstream – and how its business plan articulates some of the game-changing concepts that are proposed by the solar PV industry, which is about creating a distributed power generation system as energy systems move away from centralized fossil fuel generation.

SolarCity has cut the amount it is seeking in the IPO from $210 million to a maximum $150 million, giving it a market value of around $930 million. The company, which specialises in leasing products brings together financiers to provide zero-down rooftop solar systems to residential and commercial customers, is pitching its stock at between $13 and $15 a share. Even at $13 a share, that relates to a multiple of 8.4 times earnings. Noting its accumulated losses, the web-site Alternative Energy Stocks described it as “pricey”.

As Forbes’ pointed out, SolarCity is going to a market where most solar companies fear to tread. BrightSource, the great US hope in solar thermal, recently pulled its highly touted IPO. But Forbes says the question may be – is SolarCity a solar company or a financing company? “I would consider SolarCity not a solar company but a financial engineering company that has expertise in solar,” said Anthony Kim, a solar analyst at research firm Bloomberg New Energy Finance.

But much of that depends on tax credits, which has so far encouraged big institutions like Credit Suisse, USA Bancorp, PG&E and Google to invest $1.5 billion into 23 different funds. Its challenge will be to adapt its model beyond such incentives. Solar City is backed by Elon Musk, the founder of Tesla, who holds around a one third stake, and was founded by his cousins Lyndon Rive and Peter Rive.

Meanwhile, in another country ….

It is always useful to remind Australian politicians that far from leading in the global utility-scale solar business, it is trailing badly, as we have noted on numerous occasions.

In Chile, a new 98MW solar PV project has been announced by Desarrollos Fotovoltaicos de Chile. It will  begin construction in June 2013 and lift the total capacity of projects under construction in Chile to 1.29GW – with a lot more in the pipeline.

The Indian state of Rajasthan, meanwhile, next month will hold an auction for up 200MW of solar projects – half in solar PV, and half in solar thermal. South Africa recently completed financing for  $5.4 billion of renewable projects, including two solar thermal projects totalling 150MW, and 800MW of solar PV. Meanwhile, Yingli this week announced it will be supplying 200MW of solar PV panels for the Centinela Solar Energy facility in California that is about to begin construction.

Transfield’s Spanish solar project

And it’s not as though Australian firms are inactive, they are just busy in different countries. Last month, the firm Novatec Solar, majority owned by Transfield, opened the world’s biggest linear Fresnel collector solar thermal plant, the PE2 project, in Spain. The 30MW plant consists of two 15MW turbine units, and air-cooled condensors.  Transfield was a bidder in Australia’s Solar Flagships program. It made the shortlist, with a proposal to transform the Collinsville coal-fired generator in Queensland, but the top prize was awarded to another compact linear Fresnel technology owner, the French giant Areva. That project has now been canned after failing to secure financing and losing a Queensland government grant.

“The successful commissioning of PE2 is a major milestone for Novatec Solar,” says Guido Belgiorno-Nettis AM, Chairman of the Shareholders Committee of Novatec Solar. “It confirms the reliability, competitiveness and scalability of our Fresnel technology. In partnership with ABB, we look forward to continuing to introduce our solar boiler technology into our target markets.” The company also has a 9.5MWth facility attached to the Liddell power station in NSW.

Sunergy’s big deal in Australia

Meanwhile, The Chinese PV manufacturer China Sunergy produced an interesting statistic this week, saying that the Australian market contributed 26.0 per cent of its total revenues in the latest quarter, up from just 9 per cent previously. “We expect (Australia) to remain one of our most critical markets next year,” CEO Stephen Cai said this week. Gross margin was reported at just 0.7 per cent and the company said weak market demand and industry oversupply will continue to adversely affect its business for the rest of the year, and challenging conditions in the global solar market will persist through at least the first half of 2013.  

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