Borrego Solar Systems has looked at its bottom line and decided to drop its residential solar power installation business and stick with commercial and government projects, which it said yesterday represented more than 75-percent of its new revenue last year. Don’t worry about that residential business, though; it’s not disappearing into the ether. Borrego’s residential business has been snapped up by groSolar, although the financial terms of the deal weren’t disclosed.
While residential projects could pick up under the new U.S. stimulus plan, El Cajon, Calif.-based Borrego is betting that its commercial and government markets will still outshine residential. In its release it said it expects the commercial and government markets to continue to outpace residential installations, and it plans to expand its sales and installation operations for commercial and government projects to the Mid-Atantic region, starting in New York and New Jersey. Borrego currently installs solar photovoltaic projects in California and New England.
With many homeowners facing foreclosure, businesses and municipalities could be in a better position to finance the largely high upfront costs of a solar installation. And consumers are just spending less in general, which means rooftop solar installations on homes will likely get hit this year.
But even if Borrego doesn’t want to play house anymore, White River Junction, Vt.-based groSolar is still a believer. The company said this deal will make it the fourth-largest residential solar power installer in the U.S. The residential solar market will likely see more consolidation like this — in difficult economic times, the big get bigger so they can weather the storm.
GroSolar, which handles solar thermal for water and air heating systems as well as solar PV, operates in 12 states and in Canada. The Borrego residential division that went to groSolar operates in California and Massachusetts, neither of which are new markets for groSolar, but the deal will expand groSolar’s distribution warehouse network, which it says is already the largest in the industry and in California.
In this economic climate it’s also surprising that the investment keeps flowing into solar installation companies. Borrego raised its first round of funding earlier this month, taking in $14 million in financing, but would only say that its investor was a “large corporation.” The backers of groSolar, including NGP Energy Technology Partners, SJF Ventures and the Calvert Social Investment Fund, have reportedly poured more than $16 million into the company.