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Is The Sun Setting On Elon Musk’s Solar Empire?

Andrew Follett, Daily Caller News Foundation

Rooftop solar companies, including Elon Musk’s SolarCity, are facing huge financial hurdles as state governments cut back on lucrative green energy subsidies and reform regulatory schemes.

Elon Musk, Chairman of SolarCity and CEO of Tesla Motors, speaks at SolarCityÕs Inside Energy Summit in Manhattan, New York October 2, 2015. SolarCity on Friday said it had built a solar panel that is the most efficient in the industry at transforming sunlight into electricity.    REUTERS/Rashid Umar Abbasi

“Is the solar industry’s boom for real, or is it being propped up by hefty government subsidies?” Richard Martin asked in a Massachusetts Institute of Technology (MIT) Technology Review article published Friday. The article speculates the rooftop solar industry could be a taxpayer-backed bubble on the verge of collapse as states reform net metering rules for rooftop systems.

Martin cites recent solar panel policy changes in Nevada, California and Hawaii as evidence, and 20 other states are considering changing laws that would dramatically alter the economics of rooftop solar. Without net metering and other such subsidies, rooftop solar power is only likely feasible in two states.

Without net metering payments, rooftop solar “makes no financial sense for a consumer,” Lyndon Rive, CEO of SolarCity, admitted to The New York Times last week.

Net metering policies force electrical utilities to buy the electricity produced by rooftop solar panels at retail rates. Rooftop solar companies have pushed these policies as a way to encourage solar power, but utilities argue net metering shifts the costs of maintaining the electrical grid onto households that don’t have solar panels.

Rooftop solar problems really began after Nevada introduced sharp cutbacks to its net metering program when Elon Musk, who is the chairman of the solar company SolarCity, lost a regulatory battle to fellow liberal billionaire Warren Buffett. The policy shift caused Musk’s SolarCity stock to be devalued by roughly $165 million in a single day.

SolarCity once had stock valued at nearly $86 a share. Its share price now sits at $17.38, as of Monday afternoon.

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