SolarCity criticized  for siphoning subsidies

SolarCity (SCTY) which has become the largest solar residential installer in the USA, has come under frequent criticism of its unethical behavior in milking hundreds of millions of dollars in subsidies from the USA government. Its sister concern Tesla run by Elon Musk is also facing the same criticism. One of the biggest issue that has come up with Solar City is the fact that it claims a 30% tax credit on its solar installation which is meant for its customers. It takes away the 30% tax credit, while leasing the solar panels to its customers who may face high electricity bills and do not get any share of the subsidy. Most customers are ignorant about the complicated laws and regulations that make up the solar policies. They are happy with whatever small savings that SolarCity offers them. USA’s federal and state governments have a lengthy complex procedure for approving solar subsidies. Compared to USA, Germany has a streamlined fast procedure where the individual customers get all the benefits. Unlike Germany in the USA, the installers and developers like SolarCity have popularized the PPA and leasing model which allows them to make money while the customers usually get the raw end of the deal.

Solar City was earlier criticized for inflating the installation cost of its solar panels in order to get bigger tax credits. So if a solar installation used to cost $6/watt, they would put $9/watt which meant that they could get an extra 90c/watt or almost 50% more subsidies than they were entitled to. These practices are making more and more people raise their voices against SolarCity; and they are abusing state subsidies as well. USA citizens in general do not mind people making their billions through innovative ideas and hard work. But in case of SolarCity as lot of the wealth creation for the founders is based on using government subsidies and deals to enrich themselves at the expense of the small house owners. A backlash may be coming which might not be good for either SolarCity or Tesla’s share owners.