Sorting out solar PV downstream M&A
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By James Montgomery
News Editor
January 30, 2012 - The volatile swings seen in the upstream part of the
solar PV supply chain, from silicon to cell/module pricing, have been well
documented. End-market demand and associated policies supporting it is also
a roller coaster, with many key regions currently embroiled in what to do
for 2012 and beyond.
Meanwhile, downstream sectors in the solar PV supply chain -- those involved
with financing, development, and installation -- represent the final step in
monetizing a solar PV project. Firms in this universe have created a
fragmentation that creates pockets of niche specialists in key areas vs.
full turnkey integrators (read: high-margins), and insulates against that
upstream sturm und drang.
And investors -- both VC and firms seeking expansion via M&A -- are paying
more attention to the downstream side of the industry (see graphic below),
seeking to spawn more innovation and leaner business models. Downstream
start-ups, led by SolarCity, SunRun, Recurrent Energy, SunEdison, and Solar
Power Partners, have raised over $1 billion. (Note that Solyndra raised a
billion on its own, in headier times for all involved.) This is "setting up
a battle between cleantech industrialists and general
contractors/self-funded construction industry veterans," Lux claims.
Conclusions from the Lux study are carved into three categories of
developers and installers:
Residential: SolarCity dominates this crowded market, but its expansion into
the Northeast wont' be easy. SunRun is building its partner roster, and the
Alteris-Real Goods merger creates another strong player.
Commercial and utility-scale: Tioga and Enfinity lead a group of new
large-scale developers, but this sector has few up-and-coming players, says
Lux. Acquisitions of Recurrent, SunEdison, and SPP have concentrated
large-scale development to larger companies or vertically integrated
suppliers (First Solar, SunPower).
High-potential startups: An influx of venture capital is spawning "a burst
of entrepreneurial activity" and a "steady stream" of startups. Solar
installers were prominent in Inc. Magazine's 2011 list of the 50 fastest
growing US companies: Greenspring Energy, re2g, SunDurance Energy, OnForce
Solar, and FLS Energy.
Downstream M&A activity has remained high since MEMC bought SunEdison in
Nov. 2009. (Source: Lux Research)
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