This Week in Solar


Image source: Getty Images.

After a few weeks of earnings reports and crazy trading, solar stocks finally settled into a stable spot this week. But that doesn't mean big industry news didn't continue to come out. Let's take a look at the most important items and what you need to know about them.

Tesla's SolarCity acquisition takes a step forward

The U.S. Federal Trade Commission gave its approval for the Tesla Motors (NASDAQ: TSLA) buyout of SolarCity (NASDAQ: SCTY) , clearing a key antitrust authorization the companies needed.

This isn't the end of government and shareholder approvals necessary to move the deal forward, but it's a key step. Given the fact that they're in different businesses, antitrust probably wasn't a huge concern for either company. The biggest test will come later this year when the deal goes to a vote of shareholders, and that's why another news event about SolarCity's latest financing package from Elon Musk was so notable this week (see below).

Image source: Tesla Motors.

SolarCity's finances get unnerving

If you believe that Tesla Motors' acquisition of SolarCity is little more than a rubber stamp away, then there's no real need to worry about SolarCity's finances. But if the deal falls through, the company will still need funding to run operations this year and for years to come. In that context, finances matter a lot, because SolarCity doesn't have the money to finance solar installations itself.

That's why SolarCity's rising funding costs ( which I covered earlier this week ) are a big concern. But an even bigger concern is news that came out later in the week that Elon Musk, Lyndon Rive, and Peter Rive are buying $100 million of the $124 million offering.

SolarCity has resorted to selling debt to SpaceX before, but now its founders are keeping the company afloat. And this is after SolarCity offered a seemingly attractive 6.5% interest rate for 18 months on debt. If management can't get investors to fund the company at that rate of return, there's going to be a major problem with the SolarCity business model if the Tesla buyout falls through.

New York's new solar market -- sort of

Greentech Media reported this week that New York has gotten 1.88 GW of community solar proposals, enough to power 308,000 homes. That's an increase from zero operational community solar projects in the state today.

Community solar is intended to bring solar energy to homeowners who can't put solar on their roof. It's gaining popularity across the country. But the rules behind community solar need to be set in each state, and despite nearly 2 GW of proposals, New York still doesn't know how it would get projects built and connected to the grid. But the fact that the interest is out there from developers is a good sign for the solar industry.

Vivint Solar makes a big expansion

Also this week, Vivint Solar (NYSE: VSLR) announced that it will expand into Florida. This is key for both the company and the solar industry because Florida blocks the third-party ownership (solar leases) of solar panels on homeowners' roofs. Vivint Solar will go into the state with a loan offering, allowing homeowners to own solar and still save money.

Investors across the industry will want to watch how fast Florida's residential solar industry grows. It's a high-potential market and could be a growth driver for the industry.

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Travis Hoium has no position in any stocks mentioned. The Motley Fool owns shares of and recommends SolarCity and Tesla Motors. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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