Bright ideas

23 January 2014 By Christopher Swann

A plan by Elon Musk’s panel installer to let individuals finance its projects looks smart. It could reduce SolarCity’s costs while using collateral that’s generally safer than houses. Unless the company can increase customers 12-fold by 2018, though, its shares remain pricey.

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Panel installer SolarCity on Jan. 15 unveiled a plan to allow investors of all types - including individuals - to finance solar systems that it installs on customers’ rooftops. The company, backed by Tesla Motors founder Elon Musk, said it will launch a web-based platform later this year to offer debt investments backed by pools of its assets - mainly residential solar projects.

Most of SolarCity’s residential projects are financed with long-term contracts, usually lasting about 20 years. These give the company steady and reliable income. Homeowners generally have good credit ratings, meaning investors – until now large companies like U.S. Bancorp and Google – are taking on low risks.

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