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SolarCity plans on producing $0.50/Watt solar modules with at least 20% efficiency


Yesterday SolarCity released a SEC filing listing the milestones its co-founders need to achieve to vest tranches of shares of their new performance-based compensation plan. The milestones reveal some ambitious goals for the solar installer.

For example, the first milestone is to achieve a cost of production of $0.50/Watt for solar modules with at least 20% efficiency.

SolarCity is currently building a “Gigafactory” for the production of solar modules in Buffalo, NY (picture above). The factory was part of a deal between Silevo and the state of New York, but when SolarCity bought Silevo last year, the company decided to expand the factory deal to make it one of the largest solar panel plant in the world with an expected annual output of at least 1 GW.

At $0.50/Watt, it would make SolarCity’s panels competitive with today Chinese’s solar modules, but there’s no indication on when SolarCity expects to reach this goal – though they aim at bringing to Buffalo plant online next year.

Although important, the cost of the modules is not on where SolarCity is trying to stand out. They expect that improvements in efficiency will enable them to install fewer panels per system which should significantly reduce the cost of installation and mounting hardware. For a residential solar installer like SolarCity, access to such efficient panels could mean a significant competitive advantage.

20% efficiency would be great, but the company aims to eventually hit 24% with Silevo’s Triex technology. They think they could reduce the number of panels per installation by 25%:

SCTY_efficiencyThe breakthrough would allow for 340 watts panels the size of current 250 watts high-efficiency panels.

These module cost improvements would help the co-founders achieve other milestones of their compensation plan, including the reduction of the total cost per watt, which was at $2.91 last quarter. According to the SEC filing, to vest the last tranche of their compensation plan, they would need to achieve a total cost of installation of $2.05 per watt. This could make residential solar energy more affordable than ever before.

Lyndon Rive, CEO, and his brother, Peter Rive, CTO, are the 2 co-founders of the company and cousins to Elon Musk, Chairman and principal investor of SolarCity. They each stand to get 3 million and 2 million shares respectively. At today’s price per share of $48, the value of their stock compensation plans are $144 million and $96 million respectively.

Here’s the complete list of goals for the co-founders:

  1.  Cost of Production of $0.50/Watt of solar modules with at least 20% efficiency
  2. 1 million Customers 3.
  3. 3 million Customers
  4. 2,000 Cumulative Megawatts Installed
  5. 6,000 Cumulative Megawatts Installed
  6. PowerCo Available Cash of $170 million for Trailing Twelve Months
  7. PowerCo Available Cash of $600 million for Trailing Twelve Months
  8. Average Total Cost Per Watt of $2.75 as of the end of a fiscal quarter
  9. Average Total Cost Per Watt of $2.35 as of the end of a fiscal quarter
  10. Average Total Cost Per Watt of $2.05 as of the end of a fiscal quarter


Photo: SolarCity’s Riverbend factory under construction in Buffalo by James Grimaldi

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