In an attempt to get in on the solar game, there has been a trend whereby utilities are acquiring commercial solar companies. Most recently, Duke announced that it had acquired a major stake in REC Solar, and AES acquired Main Street Power.
We can certainly understand why utilities see acquiring solar companies as the fast track to boost their distributed generation strategy. Instant access to project pipeline and a team of experienced professionals who “get” solar seems smart enough. However, there are also potential pitfalls to this strategy: integrating an entirely new company into a utility’s existing framework can be tough (and expensive); risk and pipeline can be too concentrated with one developer; and some of the valuations that we have seen show that utilities may have dramatically overpaid to purchase the developer. With these pitfalls, acquiring a single solar developer may not be the best way to gain access to pipeline.
Looking into the future, we see more opportunities for deregulated utility subsidiaries to successfully acquire DG solar assets. One way to gain access to a nationwide project pipeline without building out an in-house solar team or acquiring another company is to work with a third party. Sol Systems has unparalleled access to project pipeline based on our relationships with hundreds of solar developers across the U.S. Our investor clients rely on our experience team to help achieve investment objectives and acquire pipeline. This diversification minimizes risk, and can be the most efficient, cost effective way to integrate solar into a utility’s portfolio.
This is an excerpt from our Solar Project Finance Journal, a monthly electronic newsletter analyzing the solar industry’s latest trends based on our unique position in the solar financing space. To view the full Journal or subscribe, please e-mail email@example.com
About Sol Systems
Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for 180MW solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. Sol Systems provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers. The company’s tailored financial services range from tax structured investments and project acquisition, to debt financing and SREC portfolio management. Inc. Magazine named Sol Systems on its annual Inc. 500 list of the nation’s fastest-growing private companies for a second consecutive year, ranking it No. 6 in the nation’s top solar companies in 2014. For more information, please visit www.solsystems.com.