SolarCity opens second operations center in Delaware

A California-based solar energy company led by billionaire Elon Musk has doubled down in Delaware in the hopes of capturing a larger share of the state's booming residential market.

SolarCity, the nation's largest residential solar installation company, opened a new 20,000-square-foot operations center in Newark last month, one a year after launching its first Delaware location in Seaford.

The company currently employs about 80 people in Delaware, but plans to add another 50 in the coming months to help meet rising demand in New Castle County.

"Delaware had one of the earliest solar markets in the country and is still one of the most progressive states when it comes to offering incentives and promoting the industry," said Lee Keshishian, the company's regional vice president for the East Coast. "That's created a healthy climate for companies like ours and we've seen a lot of interest from customers in the short time we've been here."

SolarCity is among a handful of companies pioneering a business model that allows customers to lease solar panels or enter a power purchase agreement in which homeowners buy the power produced by the panels on their homes rather than pay what otherwise can be a steep upfront costs to purchase and install the technology.

After federal and state incentives, it costs a typical Delaware homeowner about $10,000 to purchase and install a solar system. That means it can take years before the savings from solar recoups those up-front costs.

Solar City installs panels on customers' homes for free. The electricity produced by those arrays then supplements the power they purchase from the grid, but at a fixed cost typically 10 to 20 percent less than what a utility charges.

That option is becoming increasingly popular with home owners and small businesses, which account for nearly half of state's total solar energy production.

"In the last six months, I'd say about 75 percent of the new applications we've received have been under that power purchase model," said Robert Underwood, the energy programs administrator for the state's division of energy and climate, which manages the solar energy rebate program for Delmarva Power. "Having no out-of-pocket cost can be very enticing to people."

That was the case for Dover-area resident Joey Startt who signed a power purchase agreement with SolarCity in 2014. Since then, he's saved about $100 on his monthly electric bill, which previously had topped out at more than $400.

"We didn't think it would have been a wise investment to purchase solar panels because it would have taken a long time to pay them off, even with that kind of savings," Startt said. "My wife was skeptical at first because she said nothing in life is free, but when we sat down with the salesman he showed us it really was."

While the installation cost is free, there are savings and other financial benefits that lease holders are giving up by not owning the solar panels on their home, said Dale Davis, the president of the Delaware Solar Energy Coalition, an association of solar providers in the state.

"When you do one of these power purchase agreements, you're basically exchanging buying power from a utility to a leasing company," he said. "You get a lower price on your monthly bill, but you're losing the state and federal tax credits and other incentives. Instead of that money going into your pocket, it's going into theirs."

Davis said the fixed price of solar energy purchased from leasing companies also can increase over a 20-year term, which means those initial monthly savings can dwindling over time.

Those interested in adding solar to their homes would be best served by researching both options and comparing the savings over the long term, said Davis, who runs Newark-based CMI Solar & Electric.

"If you don't have the money to put down and just want something simple like paying a monthly bill, a power purchase agreement isn't a bad idea, but if you can afford to finance it yourself, you're probably better off doing that in the long run," he said. "That's why it's important that people research both sides and figure out what they want in the long term before making a decision."

While consumers may need to consider which method of financing is better for them, Google is betting more homeowners will chose SolarCity's model.

The tech giant announced last month that it is has teamed up with SolarCity to create a $750 million fund that will cover the upfront cost of residential installations in 14 states and the District of Columbia. Google has committed $300 million to the new fund, its largest renewable energy investment to date.

The deal follows a 2011 partnership between the two companies that also funded the installation of residential arrays.

Contact Scott Goss at (302) 324-2281 or email sgoss@delawareonline.com. On Twitter: @ScottGossDel