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Published on May 15th, 2014 | by Guest Contributor

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Why Sunrun Acquired REC Solar & Is Partnering With Sungevity

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May 15th, 2014 by
 

Originally published on SolarWakeup.
By Yann Brandt

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Residential solar is the fastest growing part of the solar market and some of the major players in the sector have been making big moves. Recently, Sunrun acquired the residential division of REC Solar including AEE Solar and SnapNrack while also announcing a partnership with Sungevity. SolarWakeup spoke to Andrew Pontti from Sunrun to learn how the integration and partnerships are proceeding but more importantly what it means to the solar market.

So what was the purpose of buying a residential solar installer, a solar distribution company and a racking company? For Sunrun it came down to this, “We believe in three things when driving company strategy,” says Pontti, “Reaching more consumers, lowering cost structures and strengthening the customer experience.” Acquiring an installation company and partnering with Sungevity may seem like contradictory business decisions but Sunrun’s growth appears to have expanded the definition of vertical integration beyond a single approach.

Vertical integration is a buzz word in solar, everyone wants to be everything to everybody is a tagline favorite. Just a few years ago, almost every manufacturer needed to be in the development and installation business. Today, the leaders in the solar industry also include financing providers like SolarCity, Sunrun, Clean Power Finance and more. Each has chosen a different path to increase the amount of megawatts installed.

Sunrun has a hybrid approach, creating a direct sales and installation network while growing the existing channel business. The REC team and fleet will be Sunrun branded in the near future. For existing contractors, worried about large companies circumventing their small business, there is a positive outlook. According to Pontti, “The contractor channel is the foundation of our business. They have an entrepreneurial spirit and relationships in the community that allow us to be flexible and move quickly.” For Sunrun, the fact that residential solar market only has 1% penetration means there is enough space for everyone to benefit from their platform.

All approaches have merit as more markets become available. Sunrun currently operates in 11 markets across the country. The additional channels may present opportunities through the efficiencies to open even more markets in the future. Pontti pointed out that not all growth is the same. “Some vertical integration is good, that’s what REC was. All vertical integration may really be spaceships and sports cars spending.”

Residential solar has been a booming market segment that allowed the President to include solar in the State of the Union. Through the solar lease, financial innovation has brought solar to those that never had access before. Pontti said, “Customer experience is important; it doesn’t just end when the system is sold. We engage with the customer over 20 years to make sure their experience is perfect.”

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