SolarCity, fresh off of a new $40 million financing announcement, is acquiring the 55-person residential solar installation division of groSolar and expanding to Massachusetts, New Jersey, New York and Pennsylvania. GroSolar is the East Coast’s largest residential solar installer which itself, not so long ago, acquired the residential PV installation business of Borrego Solar.

The expansion will give SolarCity the largest geographic footprint of any residential solar installer in the U.S. with 21 offices in ten states. GroSolar will continue to operate its solar panel distribution business and commercial solar project development.

This brings SolarCity to more than 1,000 employees with more than 10,000 solar installs completed since 2007.

I spoke with Lyndon Rive, the CEO of SolarCity. He believes that economies of scale will allow solar to reach grid parity without incentives in the next five years, and that this acquisition and the consolidation within the installation sector is an important step towards that.

“SolarCity will be able to offer solar to many homeowners and businesses in the Northeast at or below the cost they currently pay for electricity,” according to Rive.

According to the CEO, those economies of scale will come in the form of better buying power for the solar product, better crew utilization, a more favorable spreading of costs and improved permitting efficiency. It will also impact product quality, according to Rive.

"The other aspect is the horizontal integration that this gives us," said Rive, "allowing us to take fat out of the value chain." Rive referred to removing the stacked margins in the industry and being able to perform O&M services, monitoring services, design, installation and financial services all under one roof. 

Jonathan Bass, Director of Communications at SolarCity, said that as the market matures and consolidation occurs, SolarCity has to continue to offer value as incentives are reduced.  There's a "five-year runway" on the incentives and integration is one of the ways that the firm is going to continue to provide value.

"What we're contributing is getting to national scale and reaching parity with polluting power sources at the retail price of 15 cengs to 28 cents per kilowatt-hour."

Tags: grid parity, grosolar, leasing, lyndon rive, massachusetts, new jersey, new york, new york state, power purchase agreement, ppa, ppas, residential energy, residential leasing, residential pv, residential rooftop