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Published on August 31st, 2015 | by James Ayre

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SolarCity Aiming To Produce Solar Modules With +20% Conversion Efficiency At 50¢/Watt

August 31st, 2015 by  


Originally published on Solar Love.

SolarCity’s goals for the Silevo solar module manufacturing facility under development in Buffalo, New York, are certainly not unambitious ones — based on the company’s recent SEC filing detailing the achievements needed via its performance-based compensation plan to vest tranches of shares.

Amongst these achievements, is the meeting of production costs of just 50¢/watt for solar modules with a +20% conversion efficiency — so, as stated above, the company certainly isn’t aiming low.

SolarCity Silevo Efficiency

Considering the scale of the facility, the target doesn’t sound that strange — the manufacturing facility will, after all, be one of the largest of its type in the world once completed. Altogether, SolarCity is aiming for an annual production output of 1 gigawatt of solar modules (1,000 megawatts).

If the 50¢/watt goal is met, the facility will then be in a highly competitive position with Chinese-produced solar modules — potentially making for some very interesting market happenings. When that will occur is currently unknown, though. The facility is expected to come online in 2016, but the ramp-up period is vague.

Worth a reminder here, as well, is that the solar modules produced by the facility are expected to be high enough in conversion efficiency (over 20% to 24%) that fewer modules will be needed for solar arrays or rooftop systems, thereby reducing space requirements, and presumably installation costs.


 

Electrek provides more:

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%. The breakthroughs would allow for 340 watt panels the size of current 250 watt 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.

Here are the achievements outlined in the recent SEC filing:

  1. Cost of Production of $0.50/Watt of solar modules with at least 20% efficiency
  2. 1 million Customers
  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






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About the Author

's background is predominantly in geopolitics and history, but he has an obsessive interest in pretty much everything. After an early life spent in the Imperial Free City of Dortmund, James followed the river Ruhr to Cofbuokheim, where he attended the University of Astnide. And where he also briefly considered entering the coal mining business. He currently writes for a living, on a broad variety of subjects, ranging from science, to politics, to military history, to renewable energy. You can follow his work on Google+.



  • Blake Jackson

    Seems legit 😉

  • schaep

    Why exactly aren’t they combining thermal panels to create thermalsolar panels providing electricity and heat at the same time? The thermal part cooling the solar part would be a good thing I guess.

    • WuestenBlitz

      Moving parts. Anytime you add moving parts to to a system it adds cost and the certainty of mechanical failure. If the yields in increased efficiency are not greater than the added cost then it makes no sense to do so. 🙂

      • schaep

        ah oke thanks.
        But then there are thermal panels that just collect heat, they should have the same issue with efficiency right? If those have a usable ROI, then adding solarpanels without moving parts should increase there efficiency? hmm depends on how they are build indeed.
        Ok got thanks for clarifying.

  • Steven Geiger

    Pretty easy to do 50c when you get a factory for free and have no D&A, which is a major cost for other solar companies. With a free factory, GW scale and supposed 20% efficiency, shouldn’t they be able to do 35c-40c?

  • Bryan

    I’ll bet you anything that the 20 to 24% efficiency is cell efficiency, not module efficiency.

    Even Silevo’s website states “With above 22% cell efficiency demonstrated today on production scale materials and validated by Sandia National Labs with proven headroom to reach 24% cell efficiency.”
    In my opinion, 20 to 24% module efficiency is B.S hype.

  • Ivor O’Connor

    It is still the Wild West in regards to solar panels. We need to get it down to the point where we buy our panels with enphase or equivalent and Wi-Fi built in for monitoring on each panel. A google like site that keeps track of all panels so monitoring and theft can be carefully watched. Finally we need to be able to buy ground mounted panels that we can simply connect in to a circuit breaker along with Tesla like batteries. Plug and play. That’s the future. How long will it take for these current games to come to an end and be replaced with the future?

  • tibi stibi

    i have been wondering why the efficiency of panels hasn’t increased much. the labs seem to improve every month but in the shops it is still around 16%

  • GCO

    Seems like Tesla/SolarCity now-established marketing strategy: issue some press release stating something desirable, the more far-fetched the better, and let the media run wild with it.

    It doesn’t matter whether it’s remotely related to what the company might be able to offer in the foreseeable future, or whether competitors are already much closer the stated goal.
    The company makes zero actual promise, get free advertising, and might even be, completely erroneously, remembered as the one which pioneered the stuff.

    Ethical? No, but who’s going to remember…

  • vensonata

    U.S. national average in 2015 is about $3.30 watt installed before rebates etc. But there is quite a spread across the country.

    • Karl the brewer

      To give you a UK perspective i have just been quoted between $2.21 and $3.61 installed for broadly similar systems. Two systems were Sunpower panels with Solaredge inverter and optimisers. Cheapest system was Solaredge and Sharp panels. No rebates in the UK 🙁

      • Blake Jackson

        Karl, that’s the price of equipment installed. What’s your plan to keep your installer and manufactures accountable for production?

        • Karl the brewer

          Not quite sure i understand the question! Do i need a plan? Bit sluggish this morning 😉

          • Blake Jackson

            Good morning! It’s a question you should ask yourself, sir.

            You may want to know the process of ensuring you get what you paid for, should you run into trouble.

  • Marion Meads

    SolarCity is a big joke! With an installed cost to SolarCity at the price of $2.75/Watt, the other installers beat them already, as this is the installed price for some customers, before rebates but depends on quality of Solar PV.

    Solar World panels with Enphase microinverters get installed for $3.24/Watt before rebates, and after tax credits, it is only $2.27/Watt. Solar City’s pricing is $5.10/Watt before incentives. They wanted to steer you into PPA or leasing.

    There is also excellent program http://ygreneworks.com/ that provides financing and you pay via the property tax. And you know what that means? Your total payments, plus interests can all be deducted from your income. And if you are in the 35% tax bracket, that would be another tax break for you. In other words, if you buy the system in cash, you only take advantage of the federal tax credit, but paying through the property tax, you would get additional savings in taxes based on your tax bracket.

    If you pay off within a year, this would be your net cost: where P=principal.
    P – 0.30 P – income tax rate (P + Apr * P) + Apr * P

    A friend of mine actually netted down to 60% off of the original cost of installation. A 7.410 kW system for $24,000, over a period of 5 years, after all the tax breaks are taken into account nets out to only $9,600! And that is $1.296/Watt installed!

    • Ivor O’Connor

      Thanks Marion for the details.

    • phineasjw

      Marion, how does that ygreneworks program work? What’s the interest rate, and are their penalties for paying it off early?

      • Marion Meads

        It will soon be national program, from what I read in other articles. There is also a CleanTechnica article here last week talking about financing through the PACE program, and is done via property tax.

        Another alternative for Californians is

        http://californiafirst.org/

        Same style, you pay through the property tax.

        the interest rate depends on years to pay and your credit rating. Anywhere from 4% to 9% APR. But this is swamped by the tax break through deductible property tax.

    • Blake Jackson

      Big misconception!

      According to page 151 of IRS Publication No. 17, the principal portion of the payment is deductible for repairs, but not for improvements.

      Gee, sure hope your friend doesn’t get audited.

      The only similar benefit is for corporations using the MACRS depreciation benefit of which 85% of the value can be deducted over 5 years. IF you’re a financial corp with a 38% tax rate then, yeah, like another 30 percent credit over 5 years. In that case ANY financing will do the trick.

      Hopefully that’s what he meant.

  • newnodm

    You can bet solarcity will still want a tariff protecting their panel manufacturing from Chinese competition.

    • Marion Meads

      Even if the cost of production of SolarCity is zero, they won’t still be competitive in the market place for the installed price, which is $2.25/Watt. They’ll have to do something about their cost of installation. A lot of it is spent in marketing, and their executives salaries. That is why local installers can beat them anywhere. They just follow the SolarCity van around the neighborhood, and then undercut SolarCity. They have no big fat salaries for executives and no marketing department to spend lots of $$$. And the local installers already know the ropes of permitting and they breeze through it.

      • Ivor O’Connor

        lol, that is a VERY good business plan actually! Gorilla marketing 101.

        • Ross Hedlund

          Be weary of local installers. Thoroughly read their warranties. How long? What damages does it cover? What percentage of expected panel production will it cover? Will the warranty mean anything if the company goes under? You won’t run into these problems right away, but when panels should last 30 years can you actually expect that company to still be around? Good luck selling a home with unwarranted solar on the roof.

          • GCO

            Nothing you said depends on the company size or location.

            Hardware like the PV modules or inverter(s) aren’t guaranteed by the installer anyway, but their manufacturer, so I’d be more concerned about installers giving the customer no indication (nor choice) about what products they’ll actually use.

            I also don’t think home buyers will expect anything to be still under warranty, unless the home itself is new; I certainly didn’t.
            Regardless, homes with paid-for PV systems do sell better than those without [link], or with PPA or leases.

          • Blake Jackson

            Uh, yeah it does. And yes they will.

            You certainly didn’t care that the home you supposedly bought with solar for more than the value without had any warranty? That it produced energy that warranted the cost?

            Okay, take advice above people. Let me wave my hand in front of you and tell you “it doesn’t matter, the solar fairy fixes it when it breaks and you don’t need to know anything about it new owner.”

            When was the last time your manufacture told you you were under producing? When have you ever had them replace parts based on performance or functionality, and then paid nothing to have them replaced in your system?

            Never. Still too new for that experience.

            I can tell you of a customer with BP panels that haggled with them for over a year to get panels replaced malfunctioning 8 yearsin to a “25 year warranty.” Installer Green something? Gone! Nothing happened for him, and no know how or ability to prove his claim. And couldn’t figure out who to call, or what to ask to have anybody come take a look if it were even worth their time.

            What’s your peace of mind worth people?

        • Blake Jackson

          Yeah, good way to get slapped with a lawsuit.

          How to be a leach 101

      • Bryan

        SolaCity pricing is easy to beat and the public is learing quick that if you want the best product for the best price, you won’t get it from a leasing company.

        • Blake Jackson

          The “leasing company” allows you purchase a system guaranteed for 3 decades superceding any performance guarantee on the market. They’ll also pay you back per kWh of under production throughout the term. Better out there? Please, point me in the right direction.

          • Bryan

            And you actually believe that the leasing companies are still going to be in business even 20 years from now to honor those 30 year warranties ?

      • WuestenBlitz

        You do not understand what the SolarCity business model is and why they do what they do. No other solar company is as vertically integrated as SolarCity. Nor can anyone touch the cost/benefit scale that they have. Most panel warranties are pro rated. Which means if your 20 year panel warranty product dies at year 15 you will then have out of pocket expenses and labor. The installer, if still around, will charge you money to pull off the faulty panels and install the new ones that you had to pay a percentage of. SolarCity includes all parts and labor in their costs and fully warrants their systems for the lifetime of the products. This is either with the lease or purchase (lease/ppa, cash, and mypower). On top of that because they own the bank that finances or tranches the deal things like transfers or refinances for homeowners go smoothly because SC retains control of the financing. The list goes on and on. Your choice with solar is thus: Go cheap now and accept the risk, or pay a bit more now and have nearly zero risk and full clarity on the price of your system for its entire lifetime.

      • Blake Jackson

        More like your fly by night operatives have no obligation once off the roof, so cost is cheap. Like your business development budget.

        Wow! Yes, please sign me up with the shady company that steals marketing from the legit respectable brand. You know, the one who fights for solar choice and uses their “fat salaries” to pay for Policy development supporting the entire industry. Because it’s not about a movement, it’s about your pocket. By all means, please, leech off me shady actor! I’ll let you make a quarter.

        Watch out Marion. If that works you may get slapped with some serious litigation.

  • OnlyMe999

    i really hope they do achieve 340 watt panels and that they become a reasonable price as uk houses have small roofs meaning that we can’t generate much electricity from having solar. Most people can only get around 4kW using 250 watt panels. We would be able to get around 5.5kW using these panels which is much more useful.

    • Richard Foster

      At 50cent/watt, that would make payback time potentially less than 5 years as well.

      A much better investment for most people. I think a lot of UK homeowners would baulk at £6-7k for a 4ish kW system, but £3-4k….

      • Marion Meads

        SolarCity will never ever install the panels at cost to them!

        • Richard Foster

          No, but £4k would be more than £2k above cost…

          4kW of panels would then be 5.5kW for the same area of roof @ $0.5 per W that’s $2.75k ~ £1850

          Are you suggesting profit+installation etc will be more than £2000?

        • Blake Jackson

          Uh, yeah. Those greedy fat cats making some kind of profit.

      • OnlyMe999

        4kW of solar panels installed only costs £4-5k in the uk these days, it is affordable here but you can’t generate much electricity due to small roofs and not much sun, especially in winter. You produce just 1/8th of the electricity of july in december in the uk. Not much better in January either.

        • Richard Foster

          Really can you provide me with a link for those costs? All the estimates I’ve seen are closer to £6-7k!

          I also think the amount of electricity generated is quite significant – yes it’s not great in the winter, but it’s still not insubstantial.

          A friend of mine has them and generated roughly 4000-4500kWh on average over the past few years for a 4kW system (in Northern England).

          Now that might not cover a family of 4, but my own usage is approximately 1800kWh over the past year – a figure I expect to drop now I’ve replaced CFLs with LEDs (quick estimate suggests the CFLs were using 400kWh pa, the LEDS will be about 100kWh pa). So a 4kW system would easily produce double what I use of the course of a year.

          This is of course, helped by the fact I have gas central heating and cooker (I unfortunately am forced to – rented flat), so if I could replace them with electric/Solar Thermal panels and also get an EV, I expect a 4kW system wouldn’t cover my use, but it would still cover a significant portion of it.

  • Ronald Brakels

    Personally I’d be surprised if any new production line for silicon PV wasn’t up around 20% or more efficiency. 20%+ does seem to be becoming the new standard.

  • phineasjw

    Over on the solarpaneltalk forums, SolarCity currently seems to have the highest total installation prices of just about anyone. I routinely see greater than $5.50/watt quotes for a full installation. Whereas, other panels/vendors are in the $3.50-$4.50 installed price (for superior panels, btw). I was just quoted $4.73/W for a 7.85kW installation using 20% 327W SunPower panels.

    So, technology improvements are great, but they’re currently one of the most, if not THE most, expensive installers around. They have a long way to go price wise, and the majority of the cost isn’t in the panel itself.

    • JamesWimberley

      Very strange. SolarCity are on record – to investors, who can’t be lied to – claiming installation costs far lower than this. A blog post in March (link):
      “On AEE Member SolarCity’s quarterly earnings call, CEO Landon Rive announced that the installation cost of the company’s technology had been lowered by 20 percent per unit. The cost per watt is $2.09 for installation, $2.86 per watt in total.”
      Where do you live?

      • phineasjw

        James, is that *their* costs or their gross revenue (i.e. their customer’s costs)? I could believe that’s their costs.

        My quote was not from Solar City but from a local installer. I’m in Massachusetts. $4.73/W is actually a decent price in the Northeast for SunPower panels.

        • newnodm

          Solarcity is also talking about their direct costs. They have more overhead than many small competitors. For example, solarcity pays people to track these threads. That’s not in their direct cost calculations.

          Solarcities true retail margins have undoubtedly been reduced in the last year. But that decrease is not reflected in their wacky P&L reporting.

      • eveee

        Did they say cost or price? There is a big difference. Another thing that might be different is the roof installation requirements and local permitting. There is a lot of variance from one to another.

      • Zach

        They are on record as their cost being 2.91 last quarter all-in. Here is how they calculate it: http://files.shareholder.com/downloads/AMDA-14LQRE/621761322x0x841995/E5116309-BAE8-478A-AD7F-506EC1CABF7E/Q2_2015_Shareholder_Letter_FINAL.pdf

        Their overhead is .24 a watt. Sales is .53 a watt and installation is 2.13 a watt. So, maybe they are really pushing up their margins. But, the direct install (non-lease) portion of their business has poor margins. So I’m a little confused, unless these posters are misrepresenting prices.

      • GCO

        Their cost. What they bill customers is much higher, and they even have incentives to inflate those numbers, as the federal tax credit they pocket when setting up leases/PPA is proportional to the PV system’s alleged sales price.

        I’m in California, and had the same experience as @phineasjw:disqus: SC not only gave me the highest quote, but before that, unlike any other installer, was unable or unwilling to give me any indication about what hardware they planned to use.
        Needless to say, I went with a local guy and I’m glad I did.

        • Bob_Wallace

          I have conflicting opinions about SC’s pricing.

          At the ‘running a business’ level they are bidding high and apparently getting enough business to keep them profitable. That’s smart business.
          At the consumer level they apparently aren’t a good deal. But I can say the same thing for grocery stores. I have the option of going to the ‘big name brand’ grocery and paying twice as much for a cart full of groceries as much as at the grocery that works to keep prices low.

        • WuestenBlitz

          SolarCity is the 800 lbs gorilla in the room, with around 40% market share in residential solar nationwide. From an operational standpoint they are using panels as fast as suppliers can make them. It would be a nightmare to market any one panel or guarantee what panel would be used at which install. ZepSolar will be used 99% of thr time for mounting hardware. That and the only time the hardware matters is on a cash purchase on a limited space roof. Otherwise SolarCity is charging based on a the per KWH price the system produces which is backed by a production guarantee. A KWh is a KWh, regardless if it comes from from a 500 watt panel or two 250 watt panels. And if the system is backed by a 100% parts, labor, and production guarantee for 20-30 years what does it matter?

    • Ross Hedlund

      The problem is what warranties do these panels have. Not just there efficiency today but also 20 years down the road. What other costs will you run into later. What will it cost to take down the panels for a new roof? What happens if your local Joe schmoe company goes out of business? Who covers that warranty? Is their a weather warranty as well? What is the inverter efficiency? Does that total price include interconnection with the local power company costs, county permitting? People cam warranty anything but if that warranty is cap then who cares about the warranty.

      • phineasjw

        SunPower has a 25-year warranty — they’re perhaps the best in the business. That’s why the cost to install them is higher than typical. They’re warrantied directly from SunPower, but also from the US solar consortium. I can’t speak to SolarCity.

        • Bryan

          Sunpreme bifacial modules are the best.

          • phineasjw

            The ones on the space station are even better. Far better. https://en.wikipedia.org/wiki/Solar_panels_on_spacecraft

            And both are about as easy to obtain.

            SunPower is the best *readily available*, that people can, and are, actually installing.

          • Blake Jackson

            My God man, stop spreading your misconceptions! You’re polluting the industry. Where on Earth do you think you are getting multi-junction cells installed from, let alone producing kWhs anywhere near cost effective??? There is a reason they are used in space, because we’re spending billions to get rockets and satellites in orbit already.

          • Bryan

            Sunpreme are readily available, they’re bifacial and they offer up to a 22.6% efficiency rating and a 94.4% PTC to STC performance ratio and a -0.28% per degree C temperature coefficient rating which is far more important than efficiency.

        • Blake Jackson

          They also have Joe Solar certified SP dealer install the system for you, the definitely not so best in the biz 🙁 And when Joe “improperly installs” your system according to 4. a) of SunPower’s Limited Product and Power Warranty for “AC Modules”, you are entitled to NOTHING. It is riddled with loopholes. They don’t even directly warranty the equipment. The term AC modules is a loophole. Anything “outside SunPower’s control” voids your warranty and any performance guarantee you have. If you lease from SunPower, you signed with a third party dealer. I’ve seen a sub of a SP dealer sell the equivalent of 30 cents a kWh to a tier 3 customer in SCE.

          Dude, you have a lot of work to do.

      • GCO

        You seem ill-informed about those questions.

        Efficiencies are clearly spelled out on the modules and inverters brochures and datasheets — this of course assumes that the installer let the customer know what will actually get installed.

        I haven’t seen any PV modules not coming with a 25-year power output warranty, typically 80%, irrespective of what weather they’re subjected to. Exceptional snow or hail exceeding the modules’ mechanical strength isn’t a warranty question, but an insurance one.
        Inverters come with 10 to 25-year warranties as well.

        Those are products warranties, and do not depend on the installer.

        • Blake Jackson

          Have fun figuring out what’s what in the long run Mr. Customer! Hope you. Can find someone good to pay to take care of the mess for you in 8 years.

    • Blake Jackson

      Phil, SolarCity is not more than $5.10 a watt in ANY market, and in many places nation-wide are $4.50. You must not have much experience in solar, as you think cost of equipment are where consumers should look to find a deal. KWh’s are what turns the lights on, and SolarCity guarantees 95% of estimation production for 30 years with a money back per kWh guarantee on a bi-annual true up. Your local installer will be out of business long before then, and the customer is stuck dealing with the manufactures and have no idea how to evaluate or monitor the production compared to their manufactuer’s warranty. SolarCity takes out the unknowns for 3 decades. Your local installer is an unknown in itself. Bottom line is, you get what you pay for. You’ll most likely be working for SolarCity in the future if you want to work in residential solar.

      • WuestenBlitz

        A lot of local guys just don’t have the software available, nor the large pools of data, that SolarCity has access to and utilizes. And I know of too many people who bought systems from local mom and pop solar companies in SRP territory that no longer have any kid of warranty on their systems because they thought that SC was “too high priced.” Inverters, panel repair/replacement , labor, monitoring, etc all cost money and are crucial to the calculations of what solar will actually produce and cost you over the lifetime of a system. Shit happens. Anyone selling solar that blows this reality off is encouraging the you of today to screw over the you of tomorrow.

        • Blake Jackson

          Right on, brother!

          There is no long-term vision with these under-cutters. And no respect for the industry. Some come from companies that rape customers on price, so it’s kind of like shell shock syndrome to run through the market with the cheapest price on equipment without regard to actual value.

          the model is unsustainable, but damaging to the industry.

          • Bryan

            Cost cutters ? No longer term vision ? We’ve been in business for over 18 years now and have plenty of vision and $4.50 a Watt is simply a ripoff no matter how you slice it.

      • Bryan

        $4.50 a Watt? Are you joking? That’s a ridiculously high price in today’s market. Try less than $3.00 a Watt or 7 cents per kWh and now you’re talking fair market value pricing.

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