The Solar Power Rollercoaster: How Civic Renewables is Navigating the Residential Market
A Turbulent Industry with Untapped Potential
Table of Contents
Despite being around for two decades, the residential solar industry remains a volatile landscape. While shifting regulations, like those implemented in California last year that extended payback periods for homeowners, contribute to this instability, the inherent nature of the business also plays a role. Solar installation is labor-intensive, resistant to automation, and highly fragmented. Even the largest publicly traded installer, Sunrun, only commands 13% of the market share.
The Quest for Consistency: Civic Renewables’ Approach
This fragmentation often leads to inconsistent customer experiences. Some companies excel, while others fall short. To address this challenge, Civic Renewables is acquiring smaller solar installers and consolidating them under its umbrella.
Building on Existing Expertise
“These are really good building people,” says Lee Kesheshian, founder and CEO of Civic Renewables. “But they might not have the best bookkeeping practices or rely primarily on personal lines of credit to keep their businesses afloat.”
Civic Renewables aims to empower these skilled electricians by providing them with the necessary support systems. “We’re saying, ‘Focus on what you do well, which is being a fantastic electrician. Let’s concentrate on that,’ ” Kesheshian explains. “Now let’s go and put these systems in place under this umbrella.”
A Holistic Approach to Growth
Each acquired company retains its branding while becoming part of the larger Civic Renewables network. The parent company provides essential back-office functions like human resources, finance, procurement, and training for new employees. Initially, this focus will be on solar installations, but as the business expands, it may encompass other renewable energy solutions like heat pumps.
Creating Jobs and Driving Local Economies
For Kesheshian, a former VP at Tesla and COO at Palmetto Solar, workforce development is a key pillar of Civic Renewables’ strategy. “How can we go into these markets that haven’t historically been solar markets? The only way you’re going to make a change in these places is by giving people jobs,” he emphasizes.
This commitment to job creation aligns with the broader goal of enhancing profitability through organic growth and economies of scale rather than simply reducing headcount.
A Strategic Investment in Renewable Energy
Civic Renewables has already acquired two installers – Green Rack Solar in Pittsburgh and Ipsun Solar in Fairfax, Virginia – and plans to acquire two more this year. The company will continue to focus on the Mid-Atlantic and Midwest regions for the foreseeable future.
Backed by GEF Capital Partners, a private equity firm specializing in climate tech, conservation, and sustainability, Civic Renewables has received initial funding to launch its operations.
“We put in just a few million dollars, just to get the business going,” says Stuart Barkoff, managing partner at GEF Capital Partners. The firm has allocated additional funds for future acquisitions but declined to disclose the specific amount. Kesheshian aims to reach a point where Civic Renewables can self-fund its growth through internal resources.
GEF’s long-term vision is to develop Civic Renewables into a company generating around $30 million in earnings before interest, taxes, depreciation, and amortization (EBITDA). “That’s a very attractive asset for numerous investors out there,” Barkoff states.
A Model for the Future of Climate Tech
Given that solar technology has been around for some time, Civic Renewables’ business model could serve as a blueprint for other segments within the climate tech market. Many decarbonization efforts rely on skilled labor that is unlikely to be easily replaced by automation. While there is much discussion surrounding automation, there remains significant opportunity and investment potential in the trades sector.