Lux Research analyzes the downstream solar landscape, installers to developers and PPA/lease providers, to sort out high-potential innovators from "me-too" firms.

January 30, 2012 - The volatile swings seen in the upstream part of the solar PV supply chain, from silicon to cell/module pricing, have been well documented. End-market demand and associated policies supporting it is also a roller coaster, with many key regions currently embroiled in what to do for 2012 and beyond.

Meanwhile, downstream sectors in the solar PV supply chain -- those involved with financing, development, and installation -- represent the final step in monetizing a solar PV project. Firms in this universe have created a fragmentation that creates pockets of niche specialists in key areas vs. full turnkey integrators (read: high-margins), and insulates against that upstream sturm und drang.

And investors -- both VC and firms seeking expansion via M&A -- are paying more attention to the downstream side of the industry (see graphic below), seeking to spawn more innovation and leaner business models. Downstream start-ups, led by SolarCity, SunRun, Recurrent Energy, SunEdison, and Solar Power Partners, have raised over $1 billion. (Note that Solyndra raised a billion on its own, in headier times for all involved.) This is "setting up a battle between cleantech industrialists and general contractors/self-funded construction industry veterans," Lux claims.

Conclusions from the Lux study are carved into three categories of developers and installers:

  • Residential: SolarCity dominates this crowded market, but its expansion into the Northeast wont' be easy. SunRun is building its partner roster, and the Alteris-Real Goods merger creates another strong player.
  • Commercial and utility-scale: Tioga and Enfinity lead a group of new large-scale developers, but this sector has few up-and-coming players, says Lux. Acquisitions of Recurrent, SunEdison, and SPP have concentrated large-scale development to larger companies or vertically integrated suppliers (First Solar, SunPower).
  • High-potential startups: An influx of venture capital is spawning "a burst of entrepreneurial activity" and a "steady stream" of startups. Solar installers were prominent in Inc. Magazine's 2011 list of the 50 fastest growing US companies: Greenspring Energy, re2g, SunDurance Energy, OnForce Solar, and FLS Energy.


Downstream M&A activity has remained high since MEMC bought SunEdison in Nov. 2009. (Source: Lux Research)