Dive Brief:

• SolarCity hit its high end revenue projection for Q1 2014, deployed a record 136 megawatts, up 34% over Q1 2013’s deployment, and added a record 17,664 customers to reach 110,000-plus, a pace that will get it one million customers by mid-2018, according to CEO Lyndon Rive.
• Despite an increased net loss in Q1 2014 to $75,218 from Q1 2013’s net loss of $33,075, SolarCity began operations in its fifteenth state, Nevada, and Rive said cash flow would be positive by the end of the year, upping SolarCity’s full 2014 deployment projection from the previous projection of up to 525 megawatts to as much as 550 megawatts.
• On the strength of a 21% growth in total contracts to 100,609 in Q1 2014 and a 19% growth in customers to 110,662, Rive said the SolarCity projection for megawatts deployed in 2015 would now be between 900 and 1,000, taking SolarCity's cumulative megawatts deployed at the end of 2015 to 2,000 and its total electricity production to approximately 2.8 terawatt-hours, moving SolarCity toward becoming “one of the largest suppliers of electricity in the United States,” according to Rive.

Dive Insight:

Along with the increased 2014 projection to as much as 550 megawatts deployed, Rive increased the projection for Q2 to as much as 110 megawatts deployed, which “would make it the company’s largest quarter in its history.”

In response to questions from analysts and investors about SolarCity’s $54 million asset securitization last year and its $70.1 million securitization in April, Rive said future securitizations “will have a tax equity component and I’m pretty confident that we can get that done in the marketplace.”

The company’s strategy “is to monetize the tax equity value in the asset…[because] you really have a tax value and a contract value,” Rive explained, and that provides “a great deal of comfort when you look forward.”

Yet two threats loom on the horizon for the SolarCity solar leasing business model:

(1) The fight over net energy metering will not be settled until regulatory commissions across the country, including most major markets, come to a conclusion on solar’s value and decide whether utilities can apply a bill charge for transmission. If that bill charge is too big, it could render the SolarCity business model uneconomic.

(2) Controversy erupted in Arizona again when the Department of Revenue ruled that people who lease solar systems are responsible for property taxes that could run to $152 annually for homeowners and much higher for institutions. Solar leasing companies like Sunrun and SolarCity believe the ruling is illegal. If the legal fight supports the Department, it could render the SolarCity business model at least more challenging.