Last week, Crius Energy, a large independent energy retailer, acquired the newly-bankrupt California solar installer Verengo. That's the latest move by Crius in its steady march into the solar industry.
Verengo was founded in 2008 by Randy Bishop and Ken Button and at one point had more than 1,000 employees. Armed with equity funding from Angeleno Group and ClearSky Power & Technology Fund, Verengo grew to be one of the larger residential installers with a market share in the 3 percent to 4 percent range.
In 2014, Verengo retained Bank of America Merrill Lynch to help with its potential sale, according to a document obtained by GTM at the time, which noted that the installer had a total revenue of $116 million and deployed 25 megawatts of photovoltaics in 2013.
Verengo sold off its entire Northeast business to NRG in 2015 and sales have been declining in California in the past year. The company now has approximately $32 million in liabilities, with debtors including Bridge Bank and Spruce Finance, according to Law 360. Verengo has defaulted on one of its loans and bankruptcy seems the only avenue for the firm.
Enter Crius Solar
Crius Energy supplies electricity, natural gas (and potentially solar systems) to approximately 900,000 residential and commercial customers through a portfolio of brands and channels including Viridian Energy, Comcast Energy Rewards, FairPoint Energy and Citra Solar.
Crius has approached the solar industry through a slow, steady acquisition spree.
- Last year solar sales firm Sungevity signed a deal with Crius-owned energy retailer Viridian while displacing SolarCity at the firm. Crius Energy received a grant of 120 million warrants to purchase Series C preferred shares of Sungevity
- Crius Solar successfully bid on a small set of SunEdison assets, which included a residential solar lead-generation platform, customer lead databases and personnel
And now Crius Energy is getting into the California residential solar business with its acquisition of what remains of Verengo.
Crius created financial vehicles to bid on some of Verengo's residential solar installation assets and will provide up to $4.8 million for the bankruptcy proceeding. "The assets including Verengo's residential solar installation platform, certain contracts, and human capital," according to a release. The expected bid "reflects a purchase price of $11.9 million, consisting of $2.25 million cash contribution from Crius Energy as well as the contribution of $2.55 million cash and other interests from the non-controlling members of Newco," according to a release.
"With a track record of more than 20,000 solar installations dating back to 2008, the addition of the Verengo platform and team promises to fortify Crius Energy's position as a challenger in the fast-growing U.S. solar market," said Michael Fallquist, CEO of the trust, adding, "This transaction augments our recent acquisition of the SunEdison platform as it provides vertically integrated capability in California."
A while back, we interviewed Kelcy Pegler, then president of NRG Home Solar. Pegler suggested that the top tier in residential solar was "established, and it’s the same companies you’ll see battling for that leadership position over the next three to five years."
Given the collapse of SunEdison as well as the travails at residential-facing solar firms such as SolarCity, Sungevity, Vivint, NRG and Enphase, it seems that Pegler was mistaken -- and the top tier of solar companies remains a volatile and labile place to be doing business.