NRG Solar is acquiring thesolargroup of VC-funded efficiency and solar company Next Step Living, according to a small crowd of reliable sources. Our contacts report that the sales and solar site auditors at Next Step Living are moving to what NRG hopes will be an official Boston office. Sources have also claimed that layoffs may be occurring in certain departments at Next Step.
Sources have specifically spoken of an acquisition -- but NRG and Next Step Living are avoiding that word.
NRG's Erik Linden responds: “NRG has an existing strategic partnership with Next Step Living through which we market residential solar and other energy solutions. Beyond that, we refrain from commenting on market rumors or speculation.”
Geoff Chapin, CEO of Next Step Living, did not confirm or deny the deal, but did suggest, "There's more to it."
Jen Dunton, director of marketing at Next Step Living, told GTM, "We’re continuing to work with NRG as a strategic partner in the solar industry to further our impact toward reducing homeowners’ carbon footprints. The collective impact our partnership has already shown is promising, and we’re excited to grow these efforts together."
An acquisition would not be an enormously shocking development. NRG has announced its intention to grow its residential solar business -- and has demonstrated its willingness to acquire its way into the market. In the last 18 months, NRG has acquired residential solar installers Roof Diagnostics, Pure Energies and the sales and operations teams of the Northeast division of Verengo.
Next Step Living has a total of more than 800 employees, and its aim is to generate revenue by helping homeowners take energy-saving measures. The company is also the largest Massachusetts-based residential solar installer and was the No. 4 overall installer in Mass. in 2014 and No. 6 in Q1 2015, according to the GTM Research PV Leaderboard.
Since its founding in 2008, the company has raised more than $80 million from investors including VantagePoint Capital Partners, Black Coral Capital, Braemar Energy Ventures and Mass Green Energy Fund. The company is an energy auditor that sticks around to help the homeowner carry out the actual retrofit.
NRG is an energy giant with 47,000 megawatts of generation capacity. It is also one of the larger solar developers (through NRG Solar) and retail providers of green energy (through Green Mountain).
This week also saw the $2.2 billion acquisition of residential solar installer Vivint Solar by the world's largest renewable developer, SunEdison, in that company's continuing efforts to penetrate residential solar and feed its YieldCo. The market is seeing a mixture of vertically integrated firms such as SolarCity and SunEdison, as well as hybrid firms such as Sunrun (looking to IPO soon) and NRG Energy.
The consolidation in this market will continue as large scale becomes more of a competitive advantage.
FIGURE: Leading U.S. Residential Solar Installers, Q1 2015
Source: GTM Research U.S. PV Leaderboard, Q1 2015
The U.S. PV Leaderboard rankings track market shares of installers as opposed to project financiers/owners. Financiers that only deploy residential solar through installer partners (e.g., SunPower) do not appear in these rankings, and only the direct installation portion is represented for financiers that deploy solar both directly and through partners (e.g. Sunrun, NRG Home Solar).