SolarCity Corp (NASDAQ: SCTY) Leads The Solar Energy Market

SolarCity Corp (NASDAQ: SCTY) is leading the residential solar energy market in the United States. Over 29% of all residential solar panel installations were completed by SolarCity Corp, according to the most recent GTM Research report.

Ever since the solar energy company announced in June that it had acquired Silevo, a panel manufacturer, SolarCity Corp is able to grow and improve its position in the market.

The company’s business model is built by funding and installing solar panels on rooftops. After raising the initial cost from banks, SolarCity Corp covered the initial cost of installing solar panels for the customer. These customers pay back the company the cost of the electricity over the time of about 20 years. It’s a win-win business model, which benefits SolarCity Corp and helps customers, who pay less than they would pay to the local utility company. By getting rid of this initial cost barrier, the company built its initial 110,000 customer base.

The company is leads far ahead of its competitors. Its nearest rival, Vivint Solar, holds only 9% share of the market. SolarCity Corp held 33% of the market in the third quarter of 2013, but only 22% in 2013 overall.

The solar energy market is also consolidating. The top ten solar companies now hold 51.8% of the market in 2013, a big jump from 29.7% in 2010. Nicole Litvak, a research analyst from GMT, attributes this consolidation to the organic growth of these top companies as well as the multiple deals and acquisitions they’ve made. For home installation businesses, referral is a huge way to increase their customer base and drive sales. In the past twelve months, the residential solar energy installation market increased 38% year over year.

The company’s competitiors Solar Universe, NRG Home Solar, and Sungevity experienced significant annual growth. The first quarter this year, residential solar installation market is thriving, and the capacity for residential solar installation surpasses commercial installation capacity. In the first quarter for this year, residential installations totaled to 232 million, while commercial installations fell short at 225 million.

SolarCity shares fell 1.07% on Friday to $71.35. This year, the stock has rose 24% so far.

SolarCity also faces competition from its biggest rival, SunPower Corporation. The latter company is a vetern in the solar installation market, having been in business for 29 years.