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Written by Chris Meehan


SolarCity Corp. has reached an agreement with Zep Solar, Inc. to acquire Zep Solar for approximately $158 million. It’s the second solar company purchase over $100 million that SolarCity has announced in the past two months.

It’s important to note, however, the the purchases each benefit the company in completely different ways. The last purchase – SolarCity’s $120 million acquisition of marketing company Paramount Solar – gave SolarCity access to markets it wasn’t already operating in. Zep Solar is a component supplier that provides racking and mounting systems to solar installers and licenses its patented Zep Groove mounting system to other companies. SolarCity said Zep Solar has been a primary component supplier for the company’s residential systems this year. “Upon close of the acquisition, Zep Solar will operate as an independent business unit of SolarCity,” a spokesperson for the company said.

“Zep Solar’s product allows each of our crews to install significantly more solar every day, and it looks better on the roof than any comparable product we’ve seen,” said Tanguy Serra, SolarCity’s Executive Vice President of Operations. “By acquiring Zep Solar, we can deliver solar electricity at a lower cost than was previously possible.”

Zep’s technology has actually doubled the amount of solar SolarCity can install in a day.

“Zep Solar has a very talented team and an extremely strong patent portfolio. We plan to continue to offer the Zep Compatible platform to international installers looking to increase their productivity,” Serra added. “We will also continue to maintain the open nature of the Zep Compatible platform and continue to support integration with module manufacturers and other vendors.”

Zep’s products are designed to reduce the cost and complexity of designing, shipping, warehousing, and installing PV systems. The company will market and sell Zep Solar products in Australia, Germany, Japan and the United Kingdom.

“We achieved profitability this year and I’m proud of what the Zep Solar team has accomplished in less than four years, and even more excited about how much more we can do in partnership with SolarCity,” said Mike Miskovsky, CEO of Zep Solar, who will remain in charge of Zep Solar after the close of the acquisition.
Raymond James Equity Research Analyst Pavel Molchanov wrote a research note about the acquisition, stating the positive nature of both of SolarCity’s recent acquisitions.

“On August 13, SolarCity announced a $120 million acquisition of Paramount Solar. While in different parts of the value chain – Paramount was a marketing firm with a focus on customer acquisition – both of these transactions play into SolarCity’s clearly telegraphed strategy of vertically integrating, becoming a true one-stop-shop” he wrote. “The Paramount acquisition bolstered SolarCity’s in-house sales force, whereas Zep brings mounting systems (a key component of balance of system costs) in-house.”

“This transaction represents the latest example of the consolidation trend in the downstream of the value chain, a trend that is by no means limited to SolarCity (or even the U.S.),” Molchanov added. “We think there are two main reasons for the downstream focus of recent M&A. First, while everything in the solar space tends to be fragmented, the downstream arena (at least in North America) is in particular need of consolidation. Second, given the point to which module pricing has dropped – modules currently comprise less than a third of all-in U.S. commercial system costs, and less than quarter of all-in U.S. residential system costs – the bulk of the cost savings required to achieve grid parity will have to come from balance of system costs.”

Part of such costs can be reduced with a system like Zep, which while selling at a premium compared to other mounting systems, reduces installation time by 50 percent.