SolarCity Gobbles Up Zep Solar 0


SolarCity (SCTY), distributed energy pioneer and financier, has acquired Zep Solar, an innovative solar module mounting startup for $158 million in SolarCity stock.

I should have seen it coming.

Flashback to SolarCity’s Q1 2013 earnings call, SolarCity co-founder and CTO Peter Rive said in reference to cost-cutting innovations in residential solar:

“One of the biggest kind of step-function changes that is currently underway is the movement away from rail-based installation hardware to installation hardware that doesn’t depend on the rail,”  Rail-free installation facilitates that step-change in installation time and costs, Rive explained, because it “dramatically reduces the number of cutting, drilling and transportation operations that are required in order to be able to install solar.”

Rive was speaking of Zep, the leader in rail-free solar mounting systems and already, at that time, a valued supplier to SolarCity. It’s estimated that Zep has a 30 percent market share in residential solar mounting.

Zep’s innovative mounting product now comes to SolarCity at cost  — while other installers will soon be SolarCity’s customers.

And now, at least part of SolarCity’s financial structure and cash flow can be understood by mortals and will not require ninja accountants or the Department of Treasur

Zep’s CEO Mike Miskovsky noted, “We achieved profitability this year.”

Zep’s revenue comes from the sale of hardware to support the “Zep Groove” and to a lesser extent from licensing. The firm’s licensees include solar vendors such as Yingli Solar, Canadian Solar and Trina Solar — some of whom supply modules (and now license fees) to SolarCity. Most of Zep’s business has been in the United States.

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