SolarCity to Build PV ‘Gigafactory’ in Buffalo

solar-city-truck-505 (1) Perhaps no two companies have made a bigger splash — or more clearly demonstrated the potential of clean technology to revitalize manufacturing, create jobs and spur “green” growth of the U.S. economy — than Elon Musk’s Tesla Motors and SolarCity.

Hot on the heels of Tesla announcing it will build its lithium-ion battery ‘Gigafactory’ in Nevada, New York Gov. Andrew Cuomo announced a groundbreaking ceremony for an equally massive SolarCity facility in Buffalo. The manufacturing plant will devote 1.2 million square feet to produce solar photovoltaic (PV) cells, the governor announced Sept. 23.

“Gov. Cuomo shares our view that the United States can return to its place atop the world in advanced technology manufacturing,” SolarCity CEO Lyndon Rive was quoted in a press release. “Thanks to the governor’s leadership, we will be able to quintuple the output capacity and economic impact of Silevo’s original commitment. I couldn’t be more excited to partner with the state to make Western New York a global capital for clean energy development.”

Vertical integration; supply chain diversification

SolarCity announced it would acquire Silveo, a manufacturer of high-performance solar PV cells and modules, this past June. The acquisition was viewed as a means for SolarCity to integrate vertically by expanding upstream into solar PV manufacturing.

Though Silveo calls Fremont, California home, its manufacturing operations are located in Hangzhou, China. Nonetheless, the acquisition was also seen as way for SolarCity to diversify sourcing of the solar panels used in its main line of business – third-party leasing and installation of residential PV systems.

SolarCity sources most of its PV panels from Chinese manufacturers, such as Trina and Yingli Solar, whose panels have become more expensive in the U.S. following successive import duties and tariffs imposed by U.S. government authorities for violation of international fair trade rules.

SolarCity’s PV ‘Gigafactory’ in Buffalo

NiagaraFalls
SolarCity said it will invest $5 billion to build the solar PV manufacturing facility in Buffalo. New York has pledged $759 million to support the project, much of which is expected to take the form of cheap electrical power from Niagara Falls, the Times-Union reported.

Expected to come online and begin manufacturing in high volume as early as the first quarter of 2016, SolarCity’s investment in the Buffalo plant is projected to create more than 1,450 direct manufacturing jobs. Another 2,000 workers will provide solar services over the next five years, according to the news release from Gov. Cuomo’s office.

“We said four years ago that we have to change the mentality of Buffalo, and every day since we have been working hard to continue this new energy and momentum in Western New York. Less than a year after announcing our original plan, one of the leading solar companies in the world is coming on board and making this the largest advancement for Buffalo’s economy in a generation,” Gov. Cuomo proclaimed.

“This is bigger than anything we could have imagined. It is the perfect metaphor for Buffalo, where the fundamental strength was the available hydropower. That hydropower now, that renewable energy now, will fuel the renewable energy industry for the future. I am incredibly proud that the state is playing a role in this project, because Buffalo’s future is New York’s future, and today that future is brighter than ever.”

*Image credits: 1) SolarCity; 2) Niagara Falls State Park 

An independent journalist, researcher and writer, my work roams across the nexus where ecology, technology, political economy and sociology intersect and overlap. The lifelong quest for knowledge of the world and self -- not to mention gainful employment -- has led me near and far afield, from Europe, across the Asia-Pacific, Middle East and Africa and back home to the Americas. LinkedIn: andrew burger Google+: Andrew B Email: huginn.muggin@gmail.com

30 responses

  1. The solar lease financing model is heavily dependent on the 30% federal tax credit. That 30% tax credit expires in just 2 years.

    The solar leasing companies price their systems much higher than what consumers can purchase a system elsewhere for. (Thousands, even tens of thousands of dollars higher on larger systems).

    Far lower priced and more personalized service is available through thousands of local contractors spread across the country. This “think solar, think local” concept is quickly penetrating the consumer’s mindset.

    $0 down FHA solar loans that offer tax deductible interest are now rapidly penetrating the market. This will negative impact on the solar lease market share because solar leases and PPAs don’t offer tax deductible interest and they take away the 30% federal tax credit from the consumer.

    Homeowners and real estate professionals are now reporting that they’re having trouble selling their homes because what home buyer in his right mind will want to someone’s lease payments on a used, outdated system when they can buy a brand new system with the latest technology and keep the 30% federal tax credit for thousands less. Don’t believe it ? Well then simply type the keywords “solar lease scaring buyers” into Google and you can read many accounts of homeowners and real estate professionals reporting difficulty when trying to sell a home with a 20 year solar lease or PPA attached to it.

    Pricing for purchased solar systems continue to drop making the solar lease/PPA financing model less and less competitive. Pricing is already so low today that an average sized 4.7kW solar system can be purchased and installed for less than $11,000. Why would a consumer want to rent a product with a payment that increases by up to 2.9% per year, every year for 20 years that costs less than $11,000 ?

    Lower cost, very high efficiency, Gen 2 solar technology such as new Bifacial solar panels that offer a far more aesthetically pleasing, more durable, glass on glass, see through design are now entering the market. This new technology will probably take away from the solar leasing company’s competitive advantage.

    Many of these solar leasing companies have yet to reach profitability.

    Don’t you see where all this is headed ?

    1. It’s clear from your welcome insights, that you see a very limited run-time for ITC-driven solar leasing…Curious–do you think there are avenues for cos such as SolarCity to extend and modify their business model?
      And what do you make of their chances in PV mfg?

      1. SolarCity has had plenty of time to modify their business model and thus far has failed to do so. Several other major industry players have made the transition from leases and PPAs to loans many months ago. I feel that SolarCity has grown to such an immense size now, that the transition (retraining, re- branding etc) will be will be difficult at this stage.

        A few years ago, I had dinner in San Francisco with Dr. Shi. the CEO of Suntech, once the largest PV manufacturer in the world, exceeding 1.2 gigawatts of annual production. They are now bankrupt. For many reason, If anyone should have survived the market, it would have been Suntech.

        Elon Musk’s Gigafactory may look look promising on paper but neither Elon Musk nor SolarCity nor Silevo have any experience at building and running a Gigawatt class PV manufacturing facility. To say that it will be a phenomenal undertaking would be a grand understatement.

        Although I have a deep respect for Elon Musk and his contributions to space exploration and the EV industry, I feel that with his involvement with SolarCity and their proposed “Gigafactory”, he has probably bitten off more than he can chew.

        1. So the recent move by SolarCity to begin offering loans to their customers; surely put to rest your feelings about how their “transition (retraining, re- branding etc) will be will be difficult at this stage.”
          And perhaps the recent news that chinese manufacturers are now turning away even domestic customer orders; will put to rest your feelings that “Elon Musk’s Gigafactory may look look promising on paper … To say that it will be a phenomenal undertaking would be a grand understatement. … I feel that with his involvement with SolarCity and their proposed ‘Gigafactory’, he has probably bitten off more than he can chew.” Those chinese manufacturers are running flat out and they still can’t satisfy demand. Given the growth curve of solar around the world, just imagine the potential bottleneck that panel manufacturing might present. the SolarCity ‘gigafactory’ is just the ticket to assure a future in-house supply of this critical item.

        2. You failed to mention SolarCity’s MyPower loan requirement of a 30% balloon payment that is due on June 1st the year after installation, regardless of the amount claimed in the tax credit.

          You also failed to mention the 2.9% annual payment increase.

        3. I stand by my points. SolarCity has made the transition to adding loan offerings to their business model and to the options they offer consumers – the very transition that you questioned their ability to make. And their moves to assure an adequate future supply of panels puts them into a far better position than that of the competition – including all those thousands of local installers who might very well be left sucking wind when their access to third party panels dries up ….

        4. Here’s the new bifacial, 1/4 inch thin, solar PV technology that’s in abundance that’s going to send those gigafactories back to the drawing board with it’s ultra high efficiency and unbeatable aesthetics.

        5. Heh heh … anyone who is pinning all their salesman hopes on some sort of ‘gen 2’ technology is in for a mighty rude awakening. In reality, gen 2 is nothing more than a set of incremental advances. Altogether, those advances add up to a few percentage points worth of improvement in theoretical efficiency and a different look. BFD – gen 1 technology also looks good and also produces free electricity from the sun; and will continue to do so for many decades to come. Furthermore, it will take years before gen 2 technologies even become widely available – it always takes a few years for the next leap to make it to market in significant volumes. In the meantime, gen 1 will continue to make up the vast bulk of new installs nationwide.
          Incidentally, the new gigafactory for panels that SolarCity is planning will make use of Silevo’s ‘gen 2’ technologies and will likely also achieve efficiencies comparable to any other gen 2 technology you may care to name …

        6. Yeah, I’ll dream about the market share dominance of SolarCity. And how they will very soon have their own ‘gen-2’ technology panel factory at their disposal.
          That’s a pretty sweet dream – isn’t it, inductance?

        7. Don’t blame Doug. He had a pretty tough time transitioning from a successful used car salesman to a tax credit devouring solar lease Zombie salesman. I actually feel sorry for Doug. Here’s a video that chronicles his transformation during his solar lease training experience: It was absolutely horrid:

        8. Ha! thanks inductance – I actually did laugh out loud at this!

          Once again, it shows the depths to which you have sunk. You aren’t even pretending to debate my points – instead, you retreat to personal insults and potshots. Clearly, you no longer have much of value to contribute to the discussion …

          And once again, I ask the general question: Are comments like those helping to advance your reputation, and the reputation of the company you represent? If you are the owner of your company (what was it – “SolarBroker”? Although you have also named it as “Solar Homes”?); are you happy to be p***ing away your reputation like this? And if you are merely a salesman, do you think your boss would be happy to learn of these kinds of postings? Just asking …

        9. Actually our reputation for offering the guaranteed lowest pricing on solar on the planet is rapidly expanding. In fact, we have the solar leasing companies efforts to thank for our success.

          They present their high priced offers to the consumer, the consumer researches the Internet to find a better deal and they find our much lower priced, higher performance offerings and we close the sale, while saving the consumer thousands, even tens of thousands of dollars.

          That’s why I suggested long ago that you leave the solar leasing industry and come and join us.

          The reign of the solar lease and PPA companies has ended and the reign of the far lower priced, higher performance solar system coupled with $0 down solar loans and tax deductible interest with no balloon payment and no annual payment increase has begun.

          We can’t hire new sales reps fast enough. Why don’t you come join us?

        10. Because I don’t work in the residential solar install business (guess you haven’t yet understood that despite seventeen billion and one postings to that effect).
          And guess what? Even if I did, I would never dare to come work for such a small and insignificant company. One who is so sorely losing the competition against giants like SolarCity. Job prospects at such a marginal company are fragile, at best.
          No, I think I’ll just stick with my employment at a fortune 500 company (in an area far removed from residential solar installation).

        11. Yes, you do troll the Internet quite a bit and your “seventeen billion and one postings” are on the extreme but hey, you’re obviously paid very well by your solar leasing company employer so I wouldn’t expect anything less from someone so dedicated as you.

        12. Just can’t give it a rest, eh, inductance?
          I suppose salesmen such as yourself are well served with such obsessive compulsive behavior. Probably doesn’t put you or your company in a very good light when displayed on public comment threads, though – does it?
          But, I suppose that’s ultimately your problem to deal with …

        13. No problem here Doug. Having these lively discussions with you only results in more exposure of our much lower $2.25 watt after incentive pricing and higher performance products so your obsessive desire to continue this conversation only serves to boost our sales.

          What you don’t get is that if you would just shut up, I would go away.

          So argue on Doug, you’re doing us a favor. And here’s a little video about our new superior, far safer storage offering that’s going to crush the leasing companies offerings.

        14. Like I’ve always said – I simply don’t care about you or about your company. If you are happy with this free publicity, that’s fine with me. Not that it will help you to overtake the likes of SolarCity, but what the heck.
          Of course, you are assuming that the bad publicity you get when you name-call, or when you lie and are caught out on it publicly; is somehow better than no publicity at all. Since you are a salesman and I am not, then maybe your judgment is to be trusted that such bad publicity is indeed better than none at all.

        15. Doug, I’m serious. You’re very intelligent and you’ve got tenacity. You’d make an excellent solar sales rep. And with our much lower pricing and far better $0 down financing, you’d make a killing selling solar. Why don’t you come join us ?

        16. Not interested, inductance. The only thing that brings me to these threads is the desire to counteract your lies about SolarCity, because I care about the our societal response to the global warming threat. Let me re-post a summary here:

          When deciding which solar provider to ‘cheer’ for from the sidelines, I could choose a small outfit such as yours, with a small customer base, with no better than a poor to mediocre track record of growing their business since their founding way back in 1997, with little name recognition, and most importantly with virtually ZERO chance of ever having any major impact on national rates of solar adoption or of positively impacting our shared climate change challenge. Or, I could choose SolarCity, which has exhibited truly hyper growth rates virtually since their inception, which is by far the largest residential installer in the country by now, which has widespread name recognition, which has visionary leadership and anticipates future trends by buying their own production capacity, which will have inside track advantage with Tesla’s battery gigafactory, and most importantly does indeed stand a real chance of having truly MAJOR impacts on rates of solar adoption and of POSITIVELY and MEASURABLY impacting our shared climate change challenge.

          The choice is obvious, isn’t it?

          For that reason alone, I will resist any attempts by anyone to drag the SolarCity name through the mud or to disparage them or their business plans or their prices, simply to champion their own favorite (but far lesser) solar provider.

        17. Whatever you say Doug. Whatever you say. The choice is clear as you have said. Consumers nationwide want lower pricing better performance and better financing. So in the end, we will win with our Gen 2 solar offerings Doug.

        18. Time and the market will tell, inductance. Given that SolarCity already owns something like 1/3 of the total residential install market, I’m confidently betting that they will continue that dominance. They will continue to gain new customers at stratospheric rates – many of those new customers will still choose solar leases, while many others will begin choosing their new solar loan option. And as they continue to dominate, that will be yet more evidence that SolarCity is winning the competitive battle. And the only way they can do that is by offering good deals to their customers – after all, in a free market it is the customer who ultimately decides who is and who is not competitive. So far, the public has judged SolarCity to be the most competitive entity out there, and believes that the deals offered by SolarCity are fair and represent real customer value. Sorry, inductance – but that is the judgement of the invisible hand of the free market.
          Feel free to continue trying to compete, though. As I’ve said to you many times already, should the unthinkable occur and your company somehow outcompetes SolarCity to take the market lead; then I would just as tenaciously defend your outfit. I’m just not going to hold my breath for that outcome.

        19. Wow you sure know a lot about them, huh Doug? In fact I’ve never come across any consumer that is as knowledgeable about a company that they claim that they don’t work for as you are.

          You’re obsessed Doug. And that’s sad because we’re taking more and more market share away from the solar leasing model as every minute passes. What will happen to you Doug when all that solar leasing market share is gone?

          What will you do with yourself ? How will you spend your Saturday nights with no one to argue with. I pity you Doug.

        20. Why, I’ve already told you, inductance. I would start defending your outfit – because I would still care just as much about global warming and our societal response to it.
          But like I said – I’m not going to hold my breath waiting for you to outcompete them. That’s about as likely as green cheese being discovered on the moon.

    2. So far, this is all headed in SolarCity’s direction. They continue to gain market share and customers at dizzying paces. Along with their newly announced flexibilities in customer financing and their new initiative for access to capital through individual investors; the future is bright and it has SolarCity written all over it.

      1. Did you say losses at a record pace? “Analysts polled by FactSet expect the solar installer to report a loss of $1.12 in the third quarter. That would compare with a loss of 43 cents in the same quarter a year ago.”

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