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SolarCity 'testing' home solar loans

SolarCity is “testing” home solar loan products, says chief executive Lyndon Rive, with such loans expected to soon begin eating into the market share of the lease model upon which SolarCity has thrived.

“Solar loans have a lot of potential," Rive told analysts on Thursday after his company released its second-quarter results.

"We are testing different products on the solar loan side," he says.

While solar leases and power-purchase agreements still dominate the US residential PV market, both analysts and SolarCity rivals like Mosaic believe the market will begin shifting towards outright loans, which may offer customers a better long-term economic proposition once issues like O&M have been taken care of.

“We’ve always been a financial leader in this space, and once we have come up with the absolute best product out there, we’ll make a big announcement," Rive says.

SolarCity delivered what investors were looking for in its results, with shares rising in after-hours trading Rive said bookings were coming in faster than expected.

SolarCity is on track to finalise its acquisition of module technology firm Silevo by the end of August, and Rive reiterated the plan to have a 1GW factory up and running in New York state by the end of 2016, saying he is “super excited about… what it can do for our total installed cost”.

At present SolarCity’s installation cost is $2.29/W. By 2017 it expects that figure to have fallen to $1.90/W, once Silevo modules are “blended” into its deployment mix.

During the second quarter, the largest US residential PV installer deployed 107MW of capacity – up 102% year-on-year – and chalked up new bookings of 218MW.

“We expected these type of bookings in Q4,” Rive says.

The California-based company nevertheless held steady its deployment guidance of 500MW-550MW this year, and 900MW-1,000MW next year.

Should it meet those targets, SolarCity would own 2GW of operational PV capacity by the end of 2015, making it one of the largest electricity suppliers in the US.

Investors continue to give SolarCity a pass when it comes to profitability, as it spends heavily on marketing to prospective customers and getting PV systems on their rooftops, which will generate revenues for the company over the next few decades.

SolarCity reported a net loss in the second quarter of $88.6m on revenues of $61.3m.

To date, SolarCity has deployed 756MW of capacity, most of it under solar leases – lifting its “estimated nominal contracted payments remaining” to $3.3bn. Of that, the “retained value forecast” for SolarCity itself is $1.8bn.

SolarCity shares rose more than 5% in after-hours trading, leaving the company with a market valuation of nearly $7bn.

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