Civic Renewables, led by founder and CEO Lee Kesheshian, is making waves in the residential solar industry by acquiring small installers to improve service quality and market growth. This move comes in response to the industry’s fragmentation and inconsistent customer experiences. Civic’s approach includes maintaining the original branding of acquired companies while providing essential back-office support and training to enhance operational efficiency.
Addressing Industry Challenges
Residential solar, despite being a two-decade-old industry, remains turbulent due to factors like shifting regulations and inherent operational quirks. California’s recent policy update, which extended the time for homeowners to recoup their investments, exemplifies such regulatory impacts. Moreover, the industry is heavily labor-intensive, resistant to automation, and highly fragmented. Sunrun, the largest player in the market, holds only a 13% share, illustrating the industry’s fragmented nature.
Kesheshian, a former VP at Tesla and COO at Palmetto Solar, understands these challenges well. “This is the solar coaster. It is crazier than many other services industries,” he told TechCrunch. The primary goal of Civic Renewables is to address quality and consistency issues by consolidating small installers under a unified operational framework.
Improving Quality Through Consolidation
Civic Renewables’ strategy involves acquiring smaller solar installation companies and integrating them under its umbrella. This consolidation aims to streamline operations and improve service quality. Each acquired company retains its original branding while benefiting from Civic’s back-office support, which includes human resources, finance, and procurement. This allows the installers to focus on their core competencies, such as electrical work, while Civic handles administrative tasks.
“Generally speaking, these are really good construction people,” Kesheshian said. “But they may not have the best bookkeeping practices, or they’re keeping their business alive based on a personal line of credit.” By providing essential support, Civic Renewables helps these companies thrive, enabling them to deliver consistent, high-quality service to customers.
Workforce Development and Market Expansion
A key component of Civic Renewables’ plan is workforce development. The company aims to expand into markets that have not traditionally embraced solar energy by creating job opportunities. “How can we go into these markets that haven’t traditionally been solar markets? The only way you’re going to make a change in these places is by giving people jobs,” Kesheshian emphasized.
Civic Renewables has already acquired two installers, Green Rack Solar in Pittsburgh and Ipsun Solar in Fairfax, Virginia. The company plans to continue its focus on the Mid-Atlantic and Midwest regions, with potential to acquire two more companies this year. Backed by GEF Capital Partners, a private equity firm specializing in climate tech and sustainability, Civic Renewables has received initial funding to kickstart its acquisitions.
Financial Goals and Future Prospects
GEF Capital Partners has provided Civic Renewables with a few million dollars to initiate its business operations. Stuart Barkoff, managing partner at GEF, highlighted the firm’s support, stating, “We put in a few million dollars in, just to get the business going.” Although GEF has earmarked additional funds for future acquisitions, the exact amount remains undisclosed. Kesheshian aims for Civic Renewables to eventually finance its acquisitions independently.
The long-term financial goal for Civic Renewables is to achieve approximately $30 million in earnings before interest, tax, depreciation, and amortization (EBITDA). According to Barkoff, “That’s a very attractive asset for a number of investors in the market.”
Pathway to Sustainable Growth
Civic Renewables’ business model reflects a viable pathway for the residential solar industry and the broader climate tech market. While there is considerable buzz around automation, the need for skilled labor in decarbonization efforts remains critical. Civic’s focus on improving service quality through consolidation and workforce development positions it as a key player in the sustainable growth of the residential solar market.
From my point of view, Civic Renewables’ strategy not only addresses immediate operational challenges but also sets a precedent for future industry consolidation efforts. By leveraging expertise and providing essential support to small installers, Civic is poised to enhance service quality and expand the market, driving the residential solar industry toward greater stability and growth.
