SolarCity Corp. (NASDAQ: SCTY) has seen its shares gyrate with the markets, but a new pact signed this week could offer the company another 230,000 or some homes to go after. While we have serious doubts about all of the homes wanting to join in with the company for solar roof installations, the reality is that this new pact is with a company with customers that should be deemed more like prequalified leads rather than simply a huge pool of customers of varying demographics and views.
Viridian Energy is the new partner for SolarCity. The deal is to offer solar energy directly to homeowners at discounted rates. What is different from doing deals with larger utilities with a broader customer base is that Viridian Energy provides renewable source and natural gas-based electricity to customers at affordable prices. Since this is already a “green” biased customer base, investors may hope that the penetration rates are higher.
Under the agreement, Viridian will receive a commission from SolarCity for each sale made through this partnership. The solar offering will be made available at first to customers in Connecticut, Delaware, Maryland, Massachusetts, New Jersey and New York.
Viridian has been around since 2009 and has a good brand and a good reputation. It also counts more than 230,000 customers in the United States. SolarCity could have a good match with Viridian because solar energy can only be used during the day. Viridian allows its customers to use the energy at any time.
In short, the alliance between SolarCity and Viridian will allow energy users to use clean energy whenever they want. The deal also keeps stressing that it is at affordable rates.
With SolarCity’s expected revenues being only $147.8 million for 2013 and $236.4 million for 2014, this Viridian pact could bring some incremental revenues not currently factored in under some analyst research models. Viridian’s own press releases keep touting that it grew sales from just over $2 million in 2009 to $205 million in 2011.
SolarCity’s shares are currently around $35.50, against a 52-week range of $9.20 to $52.77, and its market cap is almost $2.8 billion.
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