What does SolarCity’s acquisition of panel manufacturer Silevo Solar mean for the industry? Editorial Director Frank Andorka shares his thoughts.
Frank Andorka, Editorial Director of Solar Power World
By Frank Andorka, Editorial Director
SolarCity continued its aggressive acquisition strategy yesterday, signing an agreement to acquire panel manufacturer Silevo Solar. The move positions SolarCity as an increasingly vertically integrated solar company.
In October 2013, SolarCity purchased Zep Solar, a well-known racking company, to supplement their burgeoning residential-leasing program. With the racking portion in-house, the company yesterday brought a panel-producer into the fold as well.
Installers may worry about how it will affect the Silevo panels already in the field and future purchases (these concerns surfaced around the Zep acquisition), as smaller installers were worried about giving money to a company many see as a direct competitor. Time will ultimately tell the tale, but the hand-wringing that accompanied the Zep acquisition had died down considerably.
To me, the acquisition means two things for the industry:
- As a public company, SolarCity will continue to look for opportunities to grow their portfolio. After all, they now have quarterly earnings reports to file, and they have an even greater need to show growth than before. This strategy is a good one (especially since these acquisitions complement — and could fuel their core installation business.
My only concern is whether continued acquisitions could raise the company’s debt/equity ratio and harm its long-term financial health. Neither of these two significant acquisitions seem to have done that, so this is good for the industry.
- Finally, it indicates that the consolidation we’ve written about before may be accelerating. My gut tells me this won’t be the last acquisition we see, either from SolarCity or other companies in the industry.
For more on the acquisition, see the blog post by Elon Musk, Peter Rive and Lyndon Rive on the SolarCity website.