Borrego Solar Systems has agreed to sell its residential installation business to groSolar for an undisclosed sum.

The El Cajon, Calif.-based Borrego said Thursday it will focus on designing and building solar energy systems for businesses and government agencies because that’s where the big money can be made. The company, which recently raised $14 million, is expanding into the mid-Atlantic region, beginning with New York and New Jersey. Borrego has been doing business in California and Massachusetts.

Borrego, founded in 1980, has reasoned that demand in the commercial and government markets will grow faster than the residential one. Sales from these two segments accounted for more 75 percent of the company’s revenue in 2008, it said. Borrego said it generated $60 million in revenue in 2008, and ended the year with more than $90 million in contracts.

Commercial and government projects tend to be larger and, until recently, more incentives were available for commercial installations, according to a study released today by the Lawrence Berkeley National Laboratory.

A change in the federal investment tax credit this year will sweeten the deal for homeowners who want solar. On the other hand, the $787 billion stimulus package signed by President Obama this week contained a $5.5 billion provision for making federal buildings more energy efficient, and that could include adding solar energy systems.

Obviously, groSolar, founded in 1998, thinks it’s getting a pretty good deal with the acquisition. The company, based in White River Junction, Vt., serves 12 states and Canada. It does both residential and commercial projects.