SolarCity's Bold Move to Become
by Ucilia Wang
SolarCity said Tuesday it's agreed to buy a solar panel maker, Silevo, an unusual move for a company that has built its business on installing solar electric systems.
The decision reflects SolarCity's desire to control its equipment supply and, in particular, the supply of low-cost solar panels that are efficient at producing solar electricity, company executives said in a blog post. Just earlier this month, the California company announced it had inked a deal to buy 100 megawatts of solar panels from Norway-based REC Group.
"What we are trying to address is not the lay of the land today, where there are indeed too many suppliers, most of whom are producing relatively low photonic efficiency solar cells at uncompelling costs, but how we see the future developing. Without decisive action to lay the groundwork today, the massive volume of affordable, high efficiency panels needed for unsubsidized solar power to outcompete fossil fuel grid power simply will not be there when it is needed," according to the blog post penned by SolarCity Chairman Elon Musk and the two co-founders, Peter Rive and Lyndon Rive.
SolarCity plans to pay $200 million in stock for Silevo and an additional $150 million in stock if the solar panel maker meets certain goals, according to SolarCity's filing with the U.S. Securities and Exchange Commission. Silevo raised funds from private equity firms such as DT Capital (affiliated with Madrone Capital), NewMargin Ventures, and GSR Ventures (connected to Mayfield Fund).
SolarCity started out in 2006 as an installer of solar panels on the roofs of homes and businesses. Silevo wouldn't be the first equipment maker bought by SolarCity, which purchased Zep Solar, a solar panel mounting system developer, last year.
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