New Hampshire, USA --
SolarCity is acquiring Zep Solar and its rackless mounting design in a
$158 million stock deal, illustrating the growing importance of
improving costs and complexity in residential solar.
Much of the cost-cutting in solar PV has been shouldered by the
upstream manufacturing side, but half the costs or more in a residential
solar PV system come from the softer side, and they'll have to keep coming down dramatically
to support widespread deployment of distributed solar PV. For its part,
Zep Solar has planted its flag in the installation innovation field
with interlocking frames and specialized components that simplify solar
array installations, and its licensees include more than a dozen prominent PV module manufacturers and component/inverter makers.
Last November SolarCity signed up too,
and since then the company's crews have doubled their daily pace of
residential installations, averaging 4-5 hours instead of a day or two,
according to Tanguy Serra, SolarCity's executive VP of operations. That
means lower costs, and better service because of less tromping around on
customer's roofs. Today "the overwhelming majority of our systems use
Zep," he said. And so, as the old story goes, they liked it so much they decided to buy the company.
It's likely no accident that the two largest U.S. solar installers,
SolarCity and Vivint, have vertically integrated business models. To get
scale and costs down in the U.S. market "you need to be vertically
integrated," explained Serra. That means "we want to avoid margin
stacking; we take it out everywhere we can." To that end, barely a month
ago the company acquired sales channel partner Paramount Solar, underscoring the importance of solar customer acquisition. Snapping up Zep similarly will take a slice out of SolarCity's cost structure for components.
Owning Zep also gives SolarCity access to future technology in the
pipeline. Serra was particularly enthusiastic about Zep's development in
two areas: non-penetrating commercial roofs, which he emphasized "is a
big, big deal for us" as they go after large-scale commercial retail
clients like Wal-Mart and BJ's; and carports, which for retailers
provide a guaranteed cost of power and shade for customers. Current
carport products on the market are too expensive and complicated, he
said, and cracking this market is "a phenomenal opportunity."
SolarCity will honor all existing Zep customer contracts to their
end, and then will manage partnership requests on a case-by-case basis,
Serra explained. (Vivint's also a Zep customer, at least for now.)
Ultimately "the vast majority of resources" will be directed to
international growth, he said, from Germany to Australia to Japan to the
U.K. Residential solar is picking up in Japan, where there's a strong
emphasis on aesthetics for any product, and that's Zep's forte -- Zep's
sleek black skirt "looks great on Japanese slate," the most common
roofing material there, Serra noted. The idea is that Zep also can help
pull SolarCity into these markets, but SolarCity won't sell power in
international markets "just yet," he said, so it won't compete directly
with those regional installers.
So where else in this vertically-integrated solar installation cost
stack is ripe for trimming? " If you've got to pay margins to a
marketing company, an installation company, a financing company --
that's three or four layers of margin, that ultimately gets borne by the
end consumer," not to mention a complex coordination of partners, Serra
said. He wouldn't say, of course, citing corporate quiet-period rules,
whether that means SolarCity's next M&A target is a financing
company, only hinting that "as opportunities come up we will consider
them."
http://www.renewableenergyworld.com/rea/news/article/2013/10/solarcity-buys-zep-behold-the-power-of-vertical-integration
No comments:
Post a Comment