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Could the SolarCity IPO Hail a New Competitive Era for Solar?

leonkaye headshotWords by Leon Kaye
Investment & Markets

This has not been the best of times for the solar power industry. Recent bankruptcies, the lingering Solyndra fallout and continuing fights between massive solar projects and other stakeholder groups portray an industry in chaos.

But despite all the negative press, companies keep pressing on. SolarCity, the California-based installation giant, revealed yesterday it started filing documents with the Securities and Exchange Commission in a move towards an initial public offering. SolarCity’s announcement comes as BrightSource Energy disclosed that it would cancel its IPO in the wake of what the company described as lack of interest in investors. Another company that manufactures inverters, Enphase Energy, had to cut its IPO shares for half the company price. Does SolarCity know something about the market that the rest of us do not?

Dana Blankenhorn, a writer for The Street, believes the solar industry is close to a crossover, i.e. when its costs become less than that of conventional fossil fuels. While solar companies are currently stifled by a glut of products on the market, Blankenhorn says solar could become cheaper than any other energy alternative later this decade. Despite the current cycle of bust and shakeouts in the industry, solar panel manufacturers and installers should be able to make steady profits within a few years. GE certainly believes so, with the company’s estimate that the rising cost of fossil fuels will make them cheaper than solar in 2016. Department of Energy estimates are a tad more optimistic, with 2015 being the year.

Regardless of the exact year, Blankenhorn envisions a near future when solar panels transition from suffering in a buyer’s market to booming in a seller’s market. For now the strength in the industry with with the installers like SolarCity, who can pick and choose which panels to use for their projects. But eventually the demand for solar panels will lift those manufacturers out of their current doldrums . . . if they can hang on.

For now, however, watch for a painful industry shakeout to continue at least for a year. Just don’t view the current volatility as a meltdown, especially as companies around the world continue to improve the performance of solar and other clean energy technologies as companies and municipalities look to insulate themselves from the pattern of energy shocks that will surely continue. The SolarCity IPO timing may just be spot on.

Leon Kaye, based in California, is a sustainability consultant and the editor of GreenGoPost.com. He also contributes to Guardian Sustainable Business and Inhabitat. You can follow him on Twitter.

Photo courtesy Leon Kaye.

Leon Kaye headshotLeon Kaye

Leon Kaye, Executive Editor, has written for Triple Pundit since 2010. He is also the Director of Social Media and Engagement for 3BL Media, and the Editor in Chief of CR Magazine. His previous work can be found at The GuardianSustainable Brands and CleanTechnica. Kaye is based in Fresno, CA, from where he happily explores California’s stellar Central Coast and the national parks in the Sierra Nevadas.

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