Solar installer SolarCity has signed a deal acquire Silevo, a solar panel technology and manufacturing company based in Silicon Valley. Silevo's claim to fame is a combination of high efficiency and low cost. SolarCity's strategic thinking behind the deal is quite simple: "Our intent is to combine what we believe is fundamentally the best photovoltaic technology with massive economies of scale to achieve a breakthrough in the cost of solar power."
On a conference call this morning, Elon Musk (best known for Tesla, but also the chairman of SolarCity) said that while this acquisition is probably a surprise to most, they felt it was necessary because they otherwise risked not having the solar panels they need to keep growing. They expect to eventually be installing 10s of gigawatts of solar panels a year, and global production isn't growing fast enough, especially at the high-efficiencies that they want. Less efficient panels are being made in large quantities, but high-efficiency ones are not. And while there's a lot of interesting technologies in the lab, Silevo stood out to Musk because their manufacturing process is simple enough to scale up in the near term.
The goal is to drive the cost of solar down so that it can compete with other sources of power without any subsidies. So driving economies of scale to these high-efficiency panels seems like the way to go for SolarCity.
They expect to build solar panel plants that are an order of magnitude than what exists today (if it doesn't remind you of the Gigafactory on Tesla's side, well, it should!) to drive those costs down, as well as invest massively in R&D.
One insight of Elon Musk is that demand grows exponentially as price drops, so if they can succeed in lowering costs, they won't just grow a little faster but much faster. I believe it was Lyndon River, the CEO of SolarCity, who said: "If we can get the cost of solar below the cost of fossil fuels without incentives, the market size for that is basically infinite over the next 30-40 year." Yeah, they're thinking big!
SolarCity expects to be able to use all the panels produced by Silevo (and maybe more), but if things turned out differently, they would be open to selling Silevo solar modules to others.
Elon Musk also mentioned that over time SolarCity will provide more storage to its customers, and that will use batteries that will be produced by Tesla.
Peter Rive, the chief technology officer at SolarCity, said that they've been looking at solar tech companies for a while before finding Silevo. They believe that Silevo's tech can deliver high-efficiency solar modules at the cost of regular solar cells, with a "relatively simple" manufacturing process.
Silevo's current cells are already very efficient, but they're not resting on their laurels. They're aiming much higher:
They are currently in discussions with the state of New York to build a very large Gigafactory-style manufacturing plant there, which would create over 1,000 jobs and produce over a gigawatt of panels per year, which would make it one of the larger solar factories in the world. Location should be around the Buffalo, NY, area and will be powered by hydropower from Niagara Falls. The plant is expected to be up and running within 2 years, so they're in a real hurry to get this new supply.
And promisingly, they're also planning "much larger" solar factories to follow the initial one, including - at some point in the future - some 10GW (!) factories.
SolarCity believes that when the acquisition is complete, that the company will be the most integrated solar company in the world. Designing panels on one side, then making them, financing the transactions, and installing them at the end of the chain.