In our recent report on the PV monitoring space, we predicted more consolidation activity the crowded space. Today’s announced acquisition of DECK Monitoring by Also Energy is a perfect example of this trend.
DECK Monitoring already topped the megawatt count in the U.S. commercial PV segment among independent providers in 2012. Also Energy took fourth place in the commercial sector and second place in the utility sector. The combined company will become the leading independent monitoring provider in terms of megawatts deployed throughout the U.S. in both the commercial and utility-scale segments.
Results for 2013 won’t be available until next year, but Also Energy reports that the new company now monitors over 1 gigawatt of PV systems.
The chief competitors of Also Energy and DECK Monitoring in the independent monitoring space are Draker (dropping from No. 1 to No. 2 overall in the U.S.) and Locus Energy (dropping to No. 3 overall in the U.S., but maintaining a strong leadership in the residential segment).
This merger involves more than just a market share roll-up. Like most monitoring companies, DECK sold products and services to the end customers that purchased PV plants, via a strong channel ofsolarintegrators. Also Energy had a very different approach, focused on OEM relationships with third-party owners who finance and own solar systems via power purchase agreement or leases. Since each company addressed a different customer population, the merger results in virtually no overlap between sales teams and channels -- a rare and desirable situation in the world of mergers and acquisitions.
On the hardware side, Also Energy has developed its own data acquisition equipment. DECK Monitoring relied on industry-standard data loggers and built relationships with inverter manufacturers so its software could be easily purchased and deployed with the inverter. Although change is unlikely in the short term, it will be interesting to see if these supply strategies are preserved in the future. Software is where challenges await the new company, as there is a high level of functional overlap between both platforms.
The profitability of a monitoring firm depends largely on its ability to deploy the same software across large numbers of systems and to lower hardware costs by ramping up manufacturing volumes. We probably won’t see any changes in the short term, but in the long run, Also Energy will have to converge both software stacks if it wants to fully reap the benefits of the DECK acquisition. Whether this translates into the creation of a unified product line or preservation of two separate products stemming from a converged platform remains to be seen.
So what comes next in the expected consolidation of the PV monitoring space? Arguably, the combined scale of Also Energy and DECK Monitoring makes its acquisition by a competitor very unlikely. Draker, with a monitored fleet that is likely approaching 1 gigawatt, also appears relatively safe. Will attention turn to Locus Energy? The firm’s dominance in the U.S. residential space could indeed make it an attractive target.
Since the global PV monitoring market remains largely country-specific, with most markets being dominated by local firms, consolidation may still happen among companies operating in different parts of the world. European providers facing a slowdown of solar markets at home may still want to get a slice of the growth in the U.S. market, and acquisition is a quick and effective way to get it. But with today’s announcement, the options are narrower and the entry ticket pricier than ever before.
Cedric Brehaut is an expert in PV systems monitoring with extensive experience in the solar industry and over fifteen years in the software business. In 2011, he established SoliChamba Consulting and began offering expert consulting services to various firms in the solar industry.
For more information on PV monitoring, including in-depth market share and competitive analysis by country, segment, and vendor category, as well as market size projections to 2017, learn more about GTM Research's latest report, Global PV Monitoring: Technologies, Markets and Leading Players, 2013-2017.