The announcement went out yesterday and industry analysts and supporters have reposted, analyzed, reacted-to, and re-tweeted it all over: SolarCity continues to expand up through the mid-Atlantic and into the Northeast with the recent acquisition of groSolar’s residential division. This comes right on the heels of an announcement at the end of January from SolarCity heralding their arrival on the East Coast with an acquisition in Maryland.
This is the most recent indicator of an industry consolidation trend that has been on the rise since 2006- perhaps fittingly marked in part by groSolar’s acquisition of Energy Outfitters. Debate about what this acquisition means to the future of the residential solar industry has popped up in industry discussion groups, websites, and on the blogs of industry analysts. Overall, the industry has reacted positively to the announcement.
“From my perspective,” said Patty Kenyon, Managing Director at Vermont non-profit solar energy festival SolarFest, “having PV systems made more affordable and the process demystified is a benefit to the average consumer and therefore to the industry as a whole.”
In a recent interview before this most recent acquisition announcement, Jonathan Bass, Director of Communications for SolarCity, said the company “wants to focus on delivering good service locally through a local office.” As for their future growth goals, he expected “about 50/50 on organic expansion and acquisition.” He stressed, though, that hiring managers at SolarCity are committed to hiring locally and drawing on the expertise of pre-established successful professionals who know the micro-regional markets on the East Coast as opposed to relocating California-based employees.
According to a cached version of the website dating as recently as February 11, 2011 groSolar was still advertising SunRun Home Solar Power Service as one of their residential offerings in Massachusetts, New Jersey, and California. However, sources at SolarCity confirmed that they would not be continuing to offer SunRun's services in former areas groSolar served. With groSolar's departure from the residential market, SunRun's New Jersey and Massachusetts remaining partners in each state have a temporary competitive advantage.
There were signs of turmoil at groSolar as early as December 2010 with the departure of Gaelan Brown, then-VP of Marketing. groSolar’s forray into residential solar has been fraught with complications since the get-go as the distributorship arm of the company in some cases early in 2006 supplied the very companies groSolar’s sales reps were competing against. Now, groSolar will narrow its business focus.
“This transaction allows us to concentrate fully on our distribution and commercial businesses, which are the fastest growing solar markets” said Jeff Wolfe, CEO, groSolar in a statement released yesterday.
What does this mean for the future of residential solar? In the Northeast at least, there will be more choices for engagement with solar energy outside of direct-purchase or limited-area SunRun Home Solar Power Service offerings. However, it also spells out certain further regional consolidation and shakedown as smaller solar installers without financing compete against encroachment of larger companies who offer such options. The Northeast will be an important market to watch as 2011 continues to unfold.