SolarCity outlines cost cuts in run up to ITC reduction

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Leading US installer SolarCity has revealed more details of its cost cutting plans in the run up to the reduction in the Investment Tax Credit from 30 to 10% in 2017.

During the company’s Q2 results call it set itself an installed cost-per-watt target of US$1.90 by 2017. It currently stands at US$2.29.

COO Tanguy Serra provided an overview of the strategy.

“We have a number of operating initiatives mapped out to get there, including further automation of our processes, further reduction of our balance of system unit costs, continued productivity improvements and introducing high efficiency, low cost to level margins through our panel mix,” he said.

Changing the source of panels will be partly achieved by the firm’s planned production output following its acquisition of manufacturer Silevo.

“We intentionally chose 2017 [as] that's been essentially when the ITC reduces from 30% down to 10,” said Lyndon Rive, SolarCity's CEO. “As we ramp up our manufacturing and we get a higher blend, the net cost will come down.”

The company reported installed capacity of 107MW for the quarter compared to 53MW in the same period last year.

The company attributed this to vast efficiency improvements among its growing installation team. The time taken for one job has been cut from 2.4 days to less than one day with the acquisition of racking manufacturer Zep Solar given part credit for this.

Spending on research and development was also up nearly ten-fold compared to Q2 2013 to US$3 million with plans for this figure to continue rising.

“The R&D component right now consists of culmination of research in many homes, other developments with Zep, battery and other energy control systems as well as heavy investments in our sulfur platform,” said Peter Rive, founder and CTO, SolarCity. “And it's difficult for us at this stage to be able to put a number out there in terms of the long-term research and development. It is something that we're investing heavily in. But for Q3 I'd expect it in the kind of US$4 million to US$6 million range.”

SolarCity also revealed it was trying a few solar loan products out and would have a “big announcement” in its solar loan offering in the future.

Following its third successful securitisation of US$201.5 million, outgoing CFO Bob Kelly said he expected future securitisations to remain around US$200-250 million in size.

SolarCity's full Q2 results can be viewed on its investor relations website.
 

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