Soaking up that summer sun... Residential solar energy company Sunrun is acquiring Vivint Solar in an all-stock deal valued at $3.2B. Vivint stock soared almost 40% on the news, and SunRun shares jumped 23%.
- The combined companies are expected to save around $90M per year thanks to the merger by cutting redundant activities (book 1 TV ad instead of 2, pay 5 solar lawyers instead of 10).
- Together, they'll have almost 500K customers and will join their solar sales forces for more growth on your roof. The marriage gives investors renewed hope after...
Corona-conomy rained on solar... On one hand, the pandemic made cost saving and self-sufficiency sexier. Home solar allows you to ditch the $100/month electricity bill and harness free energy (aka sunlight) from panels on your roof. But you still have to pay to get them installed, even with $0 down monthly financing.
- No door-to-door salespeople: The solar industry had one of its worst quarters in years, as companies were hard-pressed to not make in-person sales.
- Delayed installations: The lockdown caused delays in permits and installations, which slowed sales significantly.
- Double whammy: Sunny states with expensive electricity are perfect for solar adoption (like CA, FL, and AZ), but they've been seeing some of the biggest COVID surges. Not good for the solar biz.
Solar has a customer acquisition problem... Even for those who aren't motivated by renewables/the environment, solar can save $$ on monthly electric bills. But only around 2% of US homes are using solar power. That's partly because the market is absurdly fragmented: there are 10K solar companies and no clear industry go-to. Consolidation could help a national brand emerge to bring solar mainstream.