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Follow The Money: Vertical Integration
Views: 463
Jul 20 2014 02:15 PM | eds in Solar Power
A curious trend’s been washing through U.S. solar recently:
. . . vertical integration, the process of companies owning,
. . . more and more of their own supply chains.
Examples: 4 vertically integrated solar companies in the U.S.
SolarCity, the country’s biggest solar developer, financier, and installer, just went so far as to buy a module manufacturer (Silevo).
Sunrun/REC, a developer and financier, recently purchased the residential division of REC Solar, a major installer.
Vivint Solar/SunPower moved into selling and financing solar systems, rather than just manufacturing modules.
RGS Energy recently announced it will begin providing leasing in-house rather than through outside groups.
1) Under the federal investment tax credit (ITC) on solar systems,
. . . It gets to control the appraised value of the project as an installer, and
. . . receive the tax benefits from that appraisal as the financier.
2) When a company controls all aspects of solar PV installations,
. . . the costs are anything they say they are.
3) Financial groups got to set their own terms and high rates of return.
. . . Project developers and financiers began moving into installation,
. . . in order to exercise better control over appraisals and system pricing.
4) Vertical integration reduces market competition.
5) By vertically integrating the supply chain,
. . . companies can control access to top-tier equipment for longer periods.
. . . Rapidly expanding a new technology’s use, and
. . . the cost/system benefits it brings,
. . . allowing a vertically integrated company to quickly secure market share,
. . . before its competitors can develop rival equipment.
07-20-2014 Source: Follow the Money: Vertical Integration
. . . vertical integration, the process of companies owning,
. . . more and more of their own supply chains.
Examples: 4 vertically integrated solar companies in the U.S.
SolarCity, the country’s biggest solar developer, financier, and installer, just went so far as to buy a module manufacturer (Silevo).
Sunrun/REC, a developer and financier, recently purchased the residential division of REC Solar, a major installer.
Vivint Solar/SunPower moved into selling and financing solar systems, rather than just manufacturing modules.
RGS Energy recently announced it will begin providing leasing in-house rather than through outside groups.
1) Under the federal investment tax credit (ITC) on solar systems,
. . . It gets to control the appraised value of the project as an installer, and
. . . receive the tax benefits from that appraisal as the financier.
2) When a company controls all aspects of solar PV installations,
. . . the costs are anything they say they are.
3) Financial groups got to set their own terms and high rates of return.
. . . Project developers and financiers began moving into installation,
. . . in order to exercise better control over appraisals and system pricing.
4) Vertical integration reduces market competition.
5) By vertically integrating the supply chain,
. . . companies can control access to top-tier equipment for longer periods.
. . . Rapidly expanding a new technology’s use, and
. . . the cost/system benefits it brings,
. . . allowing a vertically integrated company to quickly secure market share,
. . . before its competitors can develop rival equipment.
07-20-2014 Source: Follow the Money: Vertical Integration
