The CEO of power giant NRG Energy, David Crane, told me earlier this week to expect big things from his company around rooftop solar systems for homes. Now here’s some major news on that front: On Thursday NRG Energy announced that it plans to acquire Roof Diagnostics Solar, the sixth largest residential solar installer in the U.S. with 470 employees. Terms of the acquisition were not disclosed.
Based in New Jersey, Roof Diagnostics Solar is currently focused on providing solar installation and financing services to East Coast home owners, but plans to expand its services to the West Coast soon. NRG Energy already has a small but growing residential solar installation and financing business called NRG Residential Solar Solutions. Roof Diagnostics Solar will start operating under the NRG Residential Solar Solutions brand within the next month.
While NRG has had a business around installing and funding solar panel systems for commercial and industrial building owners for awhile, its residential rooftop solar business with solar leases was rolled out in fits and starts. Crane told me this week that NRG hadn’t been more aggressive in the home rooftop solar market before because the price of solar systems are just now becoming affordable for about half of the U.S. this year.
But now, since the price of solar panels has come down so much, “residential solar is at the vortex of what our company is trying to do,” said Crane. NRG eventually wants to sell a branded package of residential energy services, including home automation and control systems; Crane says the company is going to spend the next 18 months rolling out these services.
Crane tells me he wants NRG to be as big or bigger than SolarCity, which is currently one of the largest solar installer and financiers in the U.S. As of the third quarter of 2013, SolarCity was responsible for a third of home solar panels on rooftops. By the end of 2014 SolarCity plans to have 1 GW of solar panels installed over its lifetime since 2006.
NRG has the balance sheet to compete, though it’s trailing an already crowded market. According to NRG’s annual report, the power company owns 25 GW of natural gas power plants, 13 GW of coal generation, 448 MW of wind farms, 1.2 GW of utility-scale solar systems, and 47 MW of distributed solar panels on rooftops (53 MW including systems under construction).
Many of NRG’s acquisitions to date have been large power plant companies that own natural gas and clean power assets. The company bought GenOn in late 2012 and Edison Mission Energy in late 2013. But NRG says its future growth will come from distributed solar and from consumers making energy choices. In its annual report it wrote:
“The Company believes that the U.S. energy industry is going to be increasingly impacted by the long-term societal trend towards sustainability, which is both generational and irreversible. Moreover, it further believes the information technology-driven revolution, which has enabled greater and easier personal choice in other sectors of the consumer economy, will do the same in the U.S. energy sector over the years to come.”
Crane wrote in that annual report that he wants NRG to operate more like one of the top four internet players — Google(s goog), Apple(s aapl), Amazon(s amzn) and Facebook(s fb) — that create consumer services that are connected, seamless, empowering and provide choices. Distributed solar systems will be a big part of that.
Solar saw massive growth in 2013. There were 4.75 GW of solar energy systems installed in 2013, including 2 GW in just the fourth quarter alone. That made solar the second largest source of new electricity generation in the U.S. last year, only behind natural gas. The amount of solar installed last year was 41 percent higher than in 2012. There are now over 12 GW of solar panels installed in the U.S. — from 440,000 solar panel systems — and 918 megawatts of solar thermal power.