Distributed Solar M&A Heats Up

California-based SolarCity is buying solar energy sales and marketing firm Paramount Solar, for about $120 million.  According to Forbes, the move highlights the challenge of grabbing consumers’ attention in a young market that is attracting many new entrants.

SolarCity will use $116.3 million in stock and cash to buy Paramount, which includes beauty and fitness direct marketing firm Guthy/Renker as a majority owner. Guthy/Renker bought its stake in Paramount’s parent company, Paramount Equity, in 2011. Paramount Equity’s CEO, Hayes Barnard, will become SolarCity’s chief revenue officer.

SolarCity expects to complete the acquisition in September 2013. The company plans to increase its installation forecast for 2013 to 278 megawatts from 270 megawatts, which takes into account the additional signed contracts that will come from Paramount.

Paramount Solar signs up customers and refers them to solar retail service providers, such as SolarCity, for the installation work. Homeowners can buy a solar energy system or lease one for up to 20 years.

Solar leases allow homeowners to pay for the solar electricity generated but not the equipment or labor costs.  Leases have propelled the growth of the residential solar market: Paramount Solar closes about 600 contracts per month – a 200% growth rate in the number of signed contracts between the second quarter of 2012 and 2013. Leases could boost the market to grow from $1.3 billion in 2012 to $5.7 billion in 2016.

This potential of a market boom has sparked other deals, and prompted existing solar companies to improve marketing and reach. According to NASDAQ, Colorado-based Real Goods Solar recently acquired software company Syndicated Solar, and Mercury Solar Systems, a New York-based installer.  Real Goods Solar will issue 7.9 million shares of class A common stock for the acquisition of Mercury. Mercury Energy was formed in 2008 and has installed more than 50 megawatts of solar projects that have cumulatively generated over $250 million in revenues, including $35 million in 2012.

Edison International announced in a press release that it acquired Chicago-based SoCore Energy, LLC, a distributed solar developer focused on commercial rooftop installations. SoCore Energy, a privately held company, was established in 2008 and focuses on the solar energy needs of multisite retailers, real estate investment trusts, and large commercial and industrial clients.

To read the full Forbes article cited in this story, click here

To read the full NASDAQ press release cited in this story, click here

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