For fast-growing solar firm, outlook remains bright under new ownership
Phil Castle, The Business Times
A fast-growing solar development company founded in Grand Junction has been sold to what’s considered a pioneering firm in the solar industry.
While the name will change from Syndicated Solar to RGS Energy, the Grand Junction office and its staff of 12 will remain in operation, said Harold Warth, regional manager.
Real Goods Solar acquired Syndicated Solar for
$2.5 million in net consideration. The transaction also included the potential for an additional $250,000 in earn-out payments at the close of the 2013 fiscal year and
1.7 million shares of stock in performance-based payments over the next 30 months.
Based in Louisville, Colo., Real Goods Solar operates 15 offices across the West and Northwest. The company sold some of the first photovoltaic panels in the United States in 1978 and since has installed more than 15,000 solar systems generating a total of more than 100 megawatts of electricity.
Justin Pentelute, who founded Syndicated Solar in 2009 and served as its chief executive officer, will serve as president of the syndicated business unit of RGS Energy, leveraging the back office and supply chain capabilities of Real Goods Solar to increase sales and revenue.
“All of us at Syndicated Solar are very pleased to be joining Real Goods Solar, a true pioneer and an iconic firm in the solar industry,” Pentelute stated in a news release. “We have grown substantially over the past few years. And as part of Real Goods Solar, we can create an even stronger residential solar team to capture the tremendous runway in front of us as we bring this wonderful, 100 percent clean, renewable and economically attractive energy to more customers across the nation.”
Kam Mofid, CEO of Real Goods Solar, stated in the release the acquisition will add needed capabilities to the company. “Justin and his team have quickly established a solid reputation in our industry. I am confident our combined residential organization will scale and expand rapidly in this very exciting part of the market,” Mofid said.
Although Pentelute founded Syndicated Solar in Grand Junction, he subsequently moved the headquarters of the company to Denver while also opening regional offices in San Jose, Calif. and St. Louis.
Syndicated Solar earned revenues of $2.5 million in 2011 and $7.3 million in 2012. Revenue is expected to double in 2013.
Warth credited growth to quality customer service, top-notch installations and proprietary software that speeds the design and pricing process. He expects that growth to continue under new ownership.
Warth said he expects the acquisition to improve installation timelines, customer service and the bottom line for the combined operations. “It’s a combination of merging the two processes to increase efficiency and performance for our customers.”
Warth is one of three people who joined Pentelute when he started Syndicated Solar. Pentelute founded and quickly expanded the operation on a number of principles, starting with quality installations and customer service, Warth said. “We determined early on we were only going provide the best of both.”
Pentelute also created proprietary software with a team of engineers and accountants to complete project proposals in 48 hours or less. That’s far faster than other companies that use manual processes Warth compared to a Model T. “We’re more like a Ferrari.”
Taking advantage of that business model as well as increasing demand for photovoltaic systems based on financial and environmental benefits, Syndicated Solar installed a variety of projects, including systems for such notable clients as Andy’s Liquor, Grande River Vineyards, Reynolds Polymer and Talbott Farms. Syndicated Solar installed a system for the first solar-powered stand-alone pharmacy in Western Colorado at Palisade Pharmacy and the first solar-powered billboard in the state.
A number of trends portend continued growth for the solar industry, Warth said, including the declining costs of photovoltaic panels.
But one of the most significant developments of all has been the emergence of third-party arrangements. Warth said power purchase agreements allow financial entities and investors to pay for the purchase and installation of solar systems, then sell the electricity generated by those systems to individual homeowners, businesses and other end users. While owners take advantage of rebates and tax credits, end users purchase electricity at what’s usually a lower cost than what they were paying under their previous utility rates.
System owners pay upfront purchase and maintenance costs. End users purchase electricity at rates that hold constant for 20 years, with little or no annual increases that are common with most utility companies. That makes solar energy available to just about anyone with a home or business as long as they have good credit, Warth said.
For those customers who can afford the purchases themselves, solar systems constitute an investment that offers substantial savings on utility bills, a hedge against rising utility rates and an excellent return on investment, he added.
“An analogy that people understand in today’s economy is comparing the 20-year set rate for electricity purchases with the ever-changing price of gasoline for their car,” Warth said. “In hindsight, if you knew four years ago you could lock in your gas price at the pump at $1.84 for the next 20 years, you would have jumped at it. This is exactly what our solar customers are doing for their future energy rates with the purchase of a solar system. It makes sense any way you slice it and dice it.”