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Solar Rooftop

Rooftop Solar Consolidation

Thin margins lead to shakeout of rooftop solar companies.

Bloomberg - It’s not the best time to be a midsize U.S. rooftop solar company.

Growth is slowing nationally, especially in California, the biggest solar market. Interest rates are creeping up. As larger rivals gain share and expand into new cities and states, some of the smaller ones are looking like possible takeover targets or closing down.

This new landscape is filtering out what Angelo Zino, a New York-based analyst at CFRA Research, described Friday as “the weaker hands.” Sungevity Inc. filed for bankruptcy this month, following the September collapse of Verengo Inc. And another rooftop company, OneRoof Energy Inc., is being wound down.

“It’s a huge inflection point,’’ Nat Kreamer, chief executive officer of Spruce Finance Inc., said in an interview this week at Infocast’s Solar Power Finance & Investment Summit in San Diego. “There are too many companies going after the same margins at the same time.”

Consolidation is already under way, said David Burton, a New York-based partner at Mayer Brown LLP, who moderated a panel discussion at the event.

“You’ll likely see more acquisitions or bankruptcies from firms that were extremely exposed to California and the Southwest,” said Hugh Bromley, a New York-based analyst at Bloomberg New Energy Finance. “That’s what we saw from Verengo and Sungevity: they didn’t pivot quickly enough into new markets.”

Clean-energy industries have seen consolidation before. Solar manufacturers acquired developers to expand into building power plants. In wind, there were opportunistic acquisitions of small developers by larger power companies. But it’s a different story now for residential solar, according to Burton.

“It’s not an upside kind of thing like with wind, it’s a desperation kind of thing,” Burton said in an interview Friday. “Some resi solar companies are running out of cash.”


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