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.
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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 ended Thursday at $67.49, soaring more than eightfold since it went public at $8 in 2012, and the company, which did not exist eight years ago, is valued at roughly $5.5 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 percent in 2013 — and the shares of many young companies have leapt 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. “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 have fueled the solar industry’s growth. A generous federal tax credit is set to shrink in a few years. It has attracted the attention of regulators, who have questioned the way it values the rooftop systems.
there have been signs of growing pains. In interviews, former employees describe a high-pressure environment that went into hyperdrive when the company went public in December 2012. Complaints to the Better Business Bureau of misleading marketing and flawed installations along with negative reviews on social-media forums like Yelp appear to be rising.
The bad reviews have attracted the attention of Peter Rive, one of SolarCity’s co-founders and its chief operations officer.
“Any negative review that we get, be it through Yelp or through our own customer-satisfaction survey, I take very seriously,” Rive said. He delves into complaints, he said, “Just because it bugs me — every single time somebody has a negative review, I want to understand” the root cause of the problem.
SolarCity and competitors like Sunrun, Sungevity and Vivint install rooftop systems for little to no upfront payment and then sell the electricity for prices below what customers pay utilities. Though greeted with skepticism at first, the service has proved appealing to customers who want solar power but do not have the cash to buy a system outright.
But as the company tries to expand and show robust growth, signs of customer dissatisfaction have emerged.
“This is the biggest homeowner’s mistake I have ever made,” said Jeffrey Leeds, of El Grenada, Calif. With an electric bill running up to $450 a month, Leeds turned to SolarCity in 2012.
But last fall he owed his utility $1,300 — more than double what he expected. SolarCity told him that he must have used more energy, but Leeds said that “absolutely nothing” had changed about the way his family lived.
SolarCity and Leeds agree that his overall costs were lower, but disagree on how much. Leeds said he saved $200, the company said about $575.
Regardless, he said, “That’s not the sort of money I thought I would be saving.”
SolarCity said Leeds’ case was unusual, affected by a complex design, a persnickety inspector and unusually foggy weather. Most customers are satisfied, it said; the rate of complaints has remained steady even though the company now signs up a new customer about every three minutes of the workday. Executives see little standing between them and the 1 million customers they want to reach in four years.
As a result, Musk says the company’s stock price is too low.
“People do not understand the magnitude of the business,” he said. “It’s really very, very significant.”