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SolarCity Shows Off Its New Modules; Now It Has to Manufacture Them

The leading installer of rooftop solar panels says it has achieved record efficiencies with its panels.
October 2, 2015

The leading installer of residential solar panels in the United States, SolarCity, boasts that the new type of modules it’s making in a small pilot plant have achieved record efficiencies of 22.04 percent, surpassing rival SunPower’s efficiencies of 21.5 percent and far exceeding the 16 percent efficiencies of commodity silicon solar panels. Though the results are impressive, the announcement also raises questions about whether SolarCity can successfully transition from being a solar panel installer to a manufacturer, especially one making a radically new type of solar technology.

The announcement, made at an event today in New York City, is hardly a surprise. The company, which installs 34 percent of rooftop solar panels in this country, has previously talked about achieving such efficiencies with its new technology, which it acquired when it bought a small startup called Silevo in 2014. Nevertheless, the tests of its products at a 100-megawatt pilot plant are important because it’s the technology that will be used in SolarCity’s gigafactory being built in Buffalo, New York. That plant is scheduled to begin operations late next year and will make 9,000 to 10,000 of the panels a day when it is fully operating.

Given that the company can make its highly efficient solar panels relatively cheaply, says Peter Rive, SolarCity cofounder and chief technology officer, the module is “in my opinion, the best on the planet.”

The demand for residential solar panels has been booming in recent years, driven by generous federal tax credits and rules in most states that allow owners of the panels to sell excess electricity to grid operators at retail prices. But those incentives could be diminishing—federal tax credits on solar installations are scheduled to drop from 30 percent to 10 percent for businesses at the end of next year—and SolarCity’s new technology is key to the company’s strategy for surviving that change.

Solar panels that are more efficient convert more sunlight into electricity, which means they can generate more power in a given amount of space. SolarCity hopes to have its installed costs at $2.50 per watt, down from $2.90 currently, even before adopting the new technology. Having the new panels should further reduce SolarCity’s total installed cost to around $2.20 per watt, says Rive.

Despite the encouraging results from the pilot plant, manufacturing any new solar technology is a huge risk; scaling up the production processes quickly and doing so while maintaining the efficiencies of the modules and without increasing costs could be difficult. And there are no guarantees that by the time the modules are commercially available they will still be the best on the planet.

SolarCity has rapidly grown as a services company, offering homeowners attractive leasing and other financial options and installations. Indeed, the success of the company, founded in 2006, can be directly tied to its decision to avoid manufacturing; it has long bought its panels, mostly from Chinese producers.

Over that time, numerous companies have failed at manufacturing new types of solar panels. The list includes such experienced manufacturing companies as General Electric, which dropped plans to build a $300 million plant that would have been the country’s largest solar factory in 2013. In August, TSMC, the giant Taiwan-based semiconductor manufacturer, said its solar subsidiary would cease operations.   

It’s good news that SolarCity has achieved positive results at the pilot plant. But jumping from a 100-megawatt test facility to the one-gigawatt factory in Buffalo (these figures refer to the total capacity of the panels that can be produced there) is a big gamble.

Then again, it’s also a reminder that the company, whose chairman is Elon Musk, the founder of Tesla Motors and SpaceX, has always been eager to shake up the industry. So far SolarCity has done that with financial and solar-installation services. Now it will see if it can do it in the more challenging manufacturing arena.

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