Pineapple Energy CEO Kyle Udseth joined Episode 55 of the Factor This! podcast to share how the residential solar market is adapting to policy uncertainty and macroeconomic headwinds, and why he believes the sector is primed for consolidation. Subscribe wherever you get your podcasts.
In 2010, the first cleantech movement was taking shape.
Kyle Udseth had just graduated with a master’s degree from Stanford’s business school, and figured he had an important role to play in fighting the climate crisis. This, he thought, was the time to jump in.
But the Great Recession had only just begun. Capital markets had dried up and, for Udseth, student loans, and ambitions of starting a family, beckoned.
“I look at some of my business school classmates, they powered through and weren’t deterred,” Udseth said on the Factor This! podcast. “I didn’t have the courage to do that at that time.”
Udseth’s time would come a decade later.
Corporate roles in which he led marketing and strategy efforts for Caesars Entertainment, DIRECTV, and Netflix sharpened his understanding of customer behavior, while stints with residential solar leaders Sunrun and Sunnova showcased the largely untapped opportunities in distributed energy.
Udseth founded Pineapple Energy in 2020 with the belief that even a maturing solar market had room for a different kind of residential solar and storage player.
In places where Sunrun, Sunnova, SunPower, and others control a third or more of the market, he says there’s still plenty of business to go around. The remaining share is often divided by several successful regional installers, which Pineapple Energy works to acquire to scale its own share.
Under the Pineapple Energy model, those businesses continue under their existing brands, while taking advantage of the efficiencies of a nimble corporate structure. As a result, Pineapple Energy is able to forgo traditional door-knocking for lead generation, instead benefiting from a robust pipeline of referrals.
For example, Pineapple Energy acquired Hawaii Energy Connection and SUNation, a Long Island, New York-based installer, in 2022.
The company continues to assess acquisition targets around the country, Udseth said, though rising interest rates have somewhat stunted growth. Even so, Pineapple Energy is now profitable. Acquisitions are supported through a combination of cash, debt, and company stock (Pineapple Energy began listing on the NASDAQ in 2022 through a reverse merger with Communications Systems, Inc.).
“We are still in absolutely the early innings in this space,” Udseth said. “There is so much (total addressable market) to go around.”
Udseth said he believes there’s plenty of runway for residential solar, and for Pineapple Energy, despite macroeconomic headwinds and threatening policy changes, such as California’s end of net metering.
“I think we’re able to put together pretty compelling packages for companies and we can usually come to an agreement,” Usdeth said, “if it’s the right company and they believe in the Pineapple strategy.”
