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SolarCity: Why all the buzz behind cleantech's latest IPO?

SolarCity ebbed the tide of bad financial news for the green energy industry with its successful IPO last week.  In an interview with the Monitor, SolarCity head Lyndon Rive gives a behind-the-scenes look at the company's soaring debut on Wall Street and explains what it means for the future of renewable energy. 

By Correspondent / December 18, 2012

SolarCity COO Peter Rive, Chairman Elon Musk and SolarCity CEO Lyndon Rive celebrate the company’s IPO at the NASDAQ Stock Market last Thursday. 'We are building thousands of little power plants on peoples’ roofs,' Rive told the Monitor.

Mark Von Holden/AP Images for SolarCity

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SolarCity, a San Mateo, California-based solar energy company, calmed anxious investors last week when its discounted IPO surged on Wall Street. In a telephone interview with The Christian Science Monitor, SolarCity CEO Lyndon Rive outlined the company's holistic approach to solar power, to which he attributes the success. Though it's often depicted as a solar installer, SolarCity is just like any other energy company, Mr. Rive said – except the power plant is on your roof:

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Question: After a rocky start last week, SolarCity shares soared 50 percent in its Wall Street debut. To what do you attribute the turnaround? 

Answer: It just comes down to the fundamentals of the business. The product is super simplistic. It’s just cheaper, cleaner electricity ... Most people when given the option of paying more for dirty power or less for clean power will take paying less for clean power. There was tremendous headwind against the solar industry. I personally underestimated how deep the scars go and the amount of money the investors have lost ... In order to get the interest level to the high demand we had, we had to give a significant discount so that the investors knew there was no risk. 

The energy industry has been around for a very long time of course, but it’s all centralized creation of energy. You create the energy at a centralized location and then you use transmission and distribution to get it to your house. Never before has there been an energy company that creates energy at the place where it’s needed. So these two concepts are disparate and haven’t been seen by investors.

There were good arguments on both sides to pull the IPO because the $8 number was just too low. But then Elon Musk, our chairman, reached out to a few of the institutional investors and started discussing the options with them. If the closest category is so new and no one has done this, you need to build the investor confidence. 

Q: Since SolarCity does not manufacture solar panels, it benefits from the flood of inexpensive solar panels from China. Are you confident prices will continue to drop or is there any concern about the era of cheap solar panels coming to an end?

A: We expect most of our cost optimization to come from economies of scale. We think that the equipment manufacturers have come close to pretty much bottom. There will be additional decreases but nothing as significant as it was in the past.

People often write that SolarCity is the country’s largest solar installer. I grind my teeth every time I see that. Or the other thing people write is that SolarCity is a solar leasing company. I grind my teeth when I see that too. We are an energy company. In order to provide the energy we need to install it via systems. It’s no different than your current utility provider. Most utilities have people out there that install the wires, maintain the infrastructure and then they finance all that and then they charge the customer a cost per kilowatt hour and no one looks at a utility going, “Oh, that is a power installtion company or a financing company.” No, they are an energy company.

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