The first inklings of the idea came to Elon Musk and a cousin in an RV heading to the Burning Man festival in 2004. Solar energy, they agreed, could be big.
But not even Musk, the billionaire behind the Tesla electric car, could have foreseen the solar power craze that is sweeping Wall Street. He and his cousins Peter and Lyndon Rive are riding a wave of exuberance over the industry and their young business, SolarCity.
The company—the nation’s largest provider of rooftop solar systems, with more than 80,000 customers—has not made a dime. And, frankly, no one quite seems to know when, or if, it will.
But SolarCity has captured investors’ imaginations and become a potent symbol of a stock market ascent that makes the vertigo-inducing heights of Twitter seem tame. SolarCity’s share price, which closed at $59.27 on Friday, has soared more than sevenfold since it went public, and the company, which did not exist eight years ago, is valued at roughly $4.9 billion.
Depending on whom you talk to, the rise of SolarCity and similar companies is either a sure sign that solar power is finally having its day or that yet another mania has gripped the markets. Two other companies, SunPower and SunEdison, have also exploded in value. In all, an estimated $13 billion was invested in solar projects in 2013, a tenfold increase since 2007, according to GTM Research, which tracks the industry.
Solar companies have had the wind at their backs lately. The broad stock market is coming off its best year since 1997—the Standard & Poor’s 500-stock index rose nearly 30% in 2013—and the shares of many young companies have leaped from one high to another. But few have been hotter than SolarCity, in part thanks to the Musk mystique surrounding Tesla Motors, itself a market darling.
This much is certain: The stock market has been very good to Musk, 42. On paper, his wealth quadrupled in 2013, to more than $5.5 billion, reflecting his stakes in SolarCity and Tesla. As chairman of SolarCity, he has little day-to-day involvement in the company.
“It’s the easiest job I have, that’s for sure,” Musk said in a telephone interview. “Most of what I do is show up to hear the good news.”
Still, SolarCity and its ilk face formidable challenges. It is trying to outrun rivals in a race to transform the power industry. Utilities are furiously working to undo the incentives that