The U.S. solar racking market has quiet revenues of billions of dollars and continues to consolidate — driven by equity firms such as Esdec and Tenex. The market segment has become a small hotbed of M&A. Who’s next?
From pv magazine USA
The fragmented, multi-billion-dollar U.S. solar racking market has long been ripe for consolidation — and over the last months and years that consolidation has been driven by private equity firms. We have reliable reports that the consolidation will continue.
Netherlands-based Esdec acquired residential PV mounting company Quick Mount last year in a roll-up of U.S. racking companies and related intellectual property. According to equities analyst Roth Capital Partners in its July industry note, Quick Mount’s revenue is growing 70% year-over-year. Last year, the firm doubled its annual production capacity to 1.2 GW.
Esdec also acquired racking companies IronRidge and EcoFasten at undisclosed prices to gain a reported 60% share of the nation’s residential racking market.
Quick Mount was one of a small number of solar companies that manufacture in-house in the U.S. Recently, Esdec announced plans to close its approximately 40-person factory in Walnut Creek, California at the end of this year.
Private equity firm Tenex acquired Unirac in 2016 and continued the market consolidation despite the pandemic this year — acquiring Ecolibrium Solar in July, adding Ecolibrium’s commercial flat roof, residential rail-less and metal roof products to its product line. Ecolibrium has installed more than 800 MW of its racking gear.
The consolidation in the racking market shows no signs of slowing down and the market segment has become a small hotbed of M&A.
Racking costs and taxonomy
According to the National Renewable Energy Laboratory’s most recent solar cost benchmarks, residential solar racking costs approximately $0.10/W and commercial solar racking costs $0.10 to $0.22/W depending on wind and snow loading measures.
While most racking systems contain flashing, mounts or feet, aluminum rails, clamps, and ballast for non-penetrating commercial installations — there is still a spectacularly wide variety of innovative racking approaches, all with their own strengths and weaknesses.
The vendor landscape is fragmented as is the application space — divided into rail-based and rail-less systems for residential roofs. Each roof type — composite shingle, standing seam metal, tile roofs, and low-slope ballasted applications requires its own specialized racking approach. This has resulted in a crowded market with a long tail of small racking firms.
Next to be acquired?
One of the people doing this company buying is Esdec CEO Stijn Vos: he told pv magazine, “We are working on acquisitions as part of our buy and build strategy….I can not talk about particular companies but the main focus is on Europe at the moment.”
The racking vendor universe:
- Rail-based residential rooftop racking vendors include Unirac, IronRidge, Mounting Systems, Polar Racking and Everest Mounting Systems.
- Rail-less residential racking comes from Quick Mount PV, ProSolar, Pegasus Solar, Unirac and Ecolibrium Solar.
- Low-slope ballasted non-penetrating racking comes from Unirac, IronRidge, DynoRaxx, SunModo, PanelClaw and KB Racking.
Standouts include U.S.-based PanelClaw; the company claims to be the flat roof-mount leader with 1.75 GW of gear deployed and a 40% U.S. share of this dependable market segment. A European standout is Germany’s K2 Systems, which has global reach and offers racking products for flat roofs, tiled roofs and many other roof types.
Vos added, “We see strong growth in both the U.S. as well as in Europe.”
It’s evident that the technological innovation and market volatility in the racking market is going to accelerate as competition continues, as the California solar mandate advances, and as solar spreads to more global residential and commercial rooftops.
BloombergNEF forecasts that Americans will install 3 GW of solar on residential rooftops in 2020, despite and because of 2020.
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Source: pv magazine