“Downstream Solar” Heats up, Consolidates with Pure Energies Buy
Power company NRG Energy acquired startup Pure Energies today to accelerate its push into residential solar, a sign of how software is becoming increasingly important to the solar industry.
Princeton, NJ-based NRG Energy today announced it bought Toronto-based Pure Energies for an undisclosed price to get access to its Web-based system for determining whether a consumer’s home is good for solar, a key step in the solar sales process. Pure Energies had gained this “customer acquisition” software in part by itself buying San Francisco-based One Block Off the Grid four years ago and Cooler Planet of Seattle in 2012.
After years of dramatic price cuts in solar hardware, much of the competition—and innovation—is migrating toward the sales, financing, and installation of residential solar, the so-called downstream end of the market. More than half the cost of a rooftop solar system is tied up in labor, permitting, marketing, sales, and other “soft costs.”
The problem is that it’s too expensive and time-consuming for consumers and solar installers to meet face to face to determine whether a home is a good fit for solar and generate a quote. Pure Energies’ software allows consumers to go online to get quotes and do group buys for discounts—the same way many people shop around for other goods and services.
“While residential solar is being increasingly embraced by homeowners of all ages across the United States, buying over the internet is the acquisition channel of choice in particular for the younger generation of Americans for whom commitment to a sustainable lifestyle is a fundamental part of their DNA,” David Crane, president and CEO of NRG Energy, said in a statement.
In a similar deal, SolarCity, which pioneered residential solar financing, last year bought Paramount Solar, which has software for generating sales leads.
Although it’s exploded in recent years, the U.S. residential solar market is still relatively immature and transitioning from an industry dominated by mom-and-pop installers. The growth of software systems to automate different tasks, such as marketing and generating quotes, reflects how the industry is gaining the types of digital tools other industries already have.
At the same time, there are a number of companies still working on the hardware end of solar by trying to make better solar cells and mounting systems. SolarCity bought Fremont, CA-based Silevo in a deal to get access to its efficient silicon solar cells, and plans to build a manufacturing facility in upstate New York to meet demand for solar in the U.S. On both ends of the market—upstream and downstream—the end goal is pretty much the same: cut the price of solar to the point that it’s cheaper than getting power from the grid. That’s increasingly the case in markets with expensive electricity, such as California.
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