SolarCity, SunRun, Recurrent Energy, SunEdison lead way as solar innovation shifts to installers

BOSTON, USA: With the solar energy industry maturing rapidly, and expanding to newer markets, the focus of innovation and investment has shifted from panels to installations — the final critical step for monetization, according to a Lux Research report titled, “Swimming Downstream: Evaluating Up-and-Coming Solar Installers and Developers.”

A flurry of M&A activity and an influx of venture capital dollars to solar service providers have led to innovation concentrated on creating new, lean business models in an extremely fragmented downstream landscape.

“Downstream start‐ups raised over $1 billion, with SolarCity, SunRun, Recurrent Energy, SunEdison and Solar Power Partners leading the way,” said Matthew Feinstein, Lux Research analyst and lead author of the report. “Solyndra raised a billion all on its own, but these downstream start‐ups will achieve what Solyndra could not – success,” added Feinstein.

Lux Research assessed the leading players in the downstream market as it stands today, sorting out the high‐potential innovators from undifferentiated “me‐too” firms. Among their conclusions:

• SolarCity dominates among residential installers. In the crowded residential installer/developer market, SolarCity is a standout performer – but can ill afford to be complacent as it expands in the northeast US. Many companies are partnering with SunRun, adding muscle to SolarCity’s biggest competitor. The Alteris‐Real Goods Solar merger in December has added a stronger player to the market.

• Commercial and utility-scale solar have few up-and-coming players. Tioga Energy and Enfinity lead the group of new large‐scale developers. The acquisitions of Recurrent Energy, SunEdison, and Solar Power Partners led to concentration of large‐scale development in the hands of larger companies or vertically‐integrated suppliers First Solar and SunPower.

• New entrants keep popping up on the back of venture dollars. A burst of entrepreneurial activity, driven by venture capital, is ensuring a steady stream of high‐potential startups. In 2011, six solar installers were among Inc. Magazine’s top 50 fastest growing companies in the US, including Greenspring Energy, re2g, SunDurance Energy, OnForce Solar, and FLS Energy.