Direct Energy acquires Astrum Solar for $54 million. With this acquisition, Direct Energy looks to combine its large market-base with Astrum Solar’s installation expertise to become a leader in residential solar.
There has been a trend lately of solar companies becoming increasingly vertically integrated. For example, Solar City recently acquired the manufacturing company Silevo. On the flip side of things, Sunrun, which has traditionally provided leasing for solar installations, acquired REC solar to break into the solar installation business.
Direct Energy, a retailer of energy and energy services, has now followed suit and acquired Astrum Solar, a full-service residential solar installer, for $54 million. The acquisition of Astrum Solar gives Direct Energy access to the U.S. residential solar market and expands its product offerings to new and existing residential customers. To date, Astrum Solar has installed approximately 4,000 residential solar systems in the Northeast U.S. and California.
By acquiring Astrum Solar, Direct Energy takes control of multiple aspects of the sales cycle. It will essentially be working with customers from start to end, which will give it a deeper relationship with customers than it would otherwise have. Direct Energy will also benefit from margin stacking, which will allow it to combine margins from each step of the sales process and in turn either increase profits, or decrease prices.
Direct Energy President and CEO Badar Khan said: “We are excited at the potential of the Astrum Solar business in a rapidly growing market, and we are delighted to be adding solar power to the range of energy options we already offer our customers. This acquisition fully aligns with our vision of using new technology and innovation to help our customers gain greater control over their energy use.” Essentially, Direct Energy looks to become a one-stop shop for any energy needs a customer may have.
“Direct Energy will look to leverage Astrum Solar’s expertise in residential solar power installation to its customers, using new technology and accelerating customer growth across the United States,” said Scott Boose, president, Direct Energy Services. “We believe the combination of Astrum’s proven capabilities in residential solar, together with Direct Energy’s deep relationships with over 6 million residential customers, will be a winning combination in the growing U.S. residential solar market.”
Direct Energy, as is true for all companies looking to vertically integrate, just needs to make sure it does not fall into the scenario where it is a jack of all trades but a master of none.