NEW YORK (TheStreet) -- SolarCity (SCTY) stock is increasing 16.22% to $21.35 in afternoon trading on Wednesday after selecting Tesla Motors (TSLA) to supply batteries for its solar array and energy solar system that will be built for Kaua'i Island Utility Cooperative (KIUC).

Tesla stock is rising 7.62% this afternoon.

KIUC has a 20-year contract to purchase solar-generated electricity for 14.5 cents per kilowatt hour from the renewable energy company, Bloomberg reports. Tesla will provide 13 megawatts of electric storage to allow KIUC to use solar electricity in the evening.

Tesla CEO Elon Musk is SolarCity's largest shareholder.

Demand for energy storage is growing, as California requires PG&E, Edison International's Southern California Edison and Sempra Energy's San Diego Gas & Electric to purchase a total of 1.3 gigawatts of energy storage capacity by the end of 2020, according to Bloomberg. New York similarly is looking to storage to free up transmission lines and ultimately eliminate power plants.

Separately, TheStreet Ratings team rates the stock as a "sell" with a ratings score of D.

SolarCity's weaknesses include its generally high debt management risk, weak operating cash flow, generally disappointing historical performance in the stock itself and poor profit margins.

You can view the full analysis from the report here: SCTY

TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.

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