Even though SolarCity’s shares tumbled another 11 percent on Thursday after a poor earnings report, Gov. Andrew M. Cuomo is standing by the state’s $750 million commitment to the company and the solar panel factory that it is building in Buffalo.
“There is no undue concern,” Cuomo said during a meeting with editors and reporters at The Buffalo News.
SolarCity’s stock has lost 37 percent of its value in the two days since the company fell short of its growth targets during the fourth quarter and warned that its first quarter installations also would be less than expected.
The company also said it is sticking with its forecast that it would install 43 percent more solar panels this year than it did last year.
SolarCity also said the Buffalo factory’s production schedule would be delayed because some of the sophisticated equipment that will go into the $900 million plant will be arriving later than expected, delaying production to the third quarter of 2017. That’s three months to six months later than initially planned.
“They said the equipment was slow coming in, which is costing them a couple of months of construction time to install the equipment,” he said.
The governor also reiterated his support for the project, which will build the biggest solar panel factory in the Western Hemisphere in South Buffalo.
“Solar is the right place to be,” he said. “Renewables are the right place to be.”
SolarCity is the dominant player in the residential rooftop solar industry, installing more than a third of all new systems last year. But the company sharply scaled back its growth plans in October in an effort to reduce its costs and generate a positive cash flow by the end of this year. SolarCity installed 73 percent more solar panels last year than it did during 2014, but the company said it expects its installations to rise by about 43 percent this year.
The company’s shares fell by 11 percent, or $1.96 on Thursday to close at a nearly three-year-low of $16.67.
The $900 million Buffalo factory, spanning 1.2 million square feet of space, is the centerpiece of Cuomo’s Buffalo Billion economic development initiative.
The factory is expected to employ about 1,460 workers once it hits full production, churning out 9,000 to 10,000 solar panels daily. The factory – the biggest solar panel production facility in the Western Hemisphere – will have the annual capacity to build enough solar panels to generate 1-gigawatt of electricity.
Construction on the factory is expected to be largely completed during the early spring. The company plans to start installing production equipment this spring – even as construction work continues on other parts of the factory.
“Some of the equipment purchases have longer lead times that we originally expected,” said Kady Cooper, a SolarCity spokeswoman. “The final equipment should be delivered in the second quarter of 2017 and we expect to begin producing modules shortly thereafter, though this is an aggressive schedule and we could experience additional delays.”
Cuomo noted that the state will own both the building and most of the equipment inside the factory – a model the state has followed to build the semiconductor industry in Albany. That model offers the state some protection should SolarCity falter.
“Renewable energy will be in demand and increasingly important worldwide for the rest of our lifetimes,” said Howard Zemsky, the president of Empire State Development. “They are the dominant player in the solar panel industry domestically. That hasn’t changed.”
“I think there’s a lot to be said for us to be partners with SolarCity, as compared with the company that was acquired by SolarCity just a couple of years ago – Sileveo – which was acquired for a couple hundred million dollars,” Zemsky said.
“This company is still worth billions of dollars and has a dominant market share in the industry,” he said. “We know from other industries that, when there are rough waters, that sometimes the industry will consolidate. I think they’re in position to emerge from that likely industry consolidation in the coming years, stronger.”