Published on Monday August 20, 2012 John Spears Business Reporter
An Ontario solar energy firm is growing southward, and says Ontario’s controversial Green Energy Act gets much of the credit.
Toronto-based Pure Energies Group has bought San Francisco-based One Block Off the Grid to develop new markets in the U.S.
Chris Stern, vice president of Pure Energies, says the new venture will expand markets for made-in-Ontario components for solar panels.
“The Green Energy Act allowed us to start our business, and it’s allowed us to move into the U.S.,” Stern said in an interview.
The takeover happened earlier this summer. Pure Energies, which is privately-held, wouldn’t disclose the price of the deal.
Pure Energies has built a business installing solar panels on residential rooftops in Ontario, generally leasing the rooftop space and paying the homeowner a fee, while selling the energy into the grid.
Now, it has acquired One Block Off the Grid, a San Francisco solar firm that started out as a non-profit venture that combined homeowners interested in installing solar panels into buying groups.
It then morphed into what Stern describes as an Expedia-type operation, which finds equipment and installers for homeowners looking to go solar.
One Block Off the Grid itself is a unit of another firm, New Enterprise Associations, which has now become an investor in Pure Energies Group.
By putting the firms together, Stern said, the new enterprise will combine One Block’s expertise in acquiring U.S. customers with Pure Energies’ skill in managing rooftop installations.
“Our goal is to bring our construction experience to the picture,” Stern said. “We’re not going to physically construct it, but we’re going to have project managers who can control the quality.”
The business model then calls for the company to sell the revenue from the solar arrays to big investment funds that can package the revenue and take advantage of renewable energy tax credits in the U.S.
The funds end up owning the physical panels.
“We’re basically building a whole bunch of power plants all over the country,” says Stern.
That provides them with a revenue stream and tax credit to sell to the investment funds.
He figures the new enterprise should be bringing in revenue at an annual rate of $50 million by the end of the year.
The U.S. business model, he acknowledges, is “convoluted” but dictated by the market structure south of the border.
It’s unlike Ontario’s feed-in tariff system, where firms or homeowners who install solar panels can acquire a 20-year contract, at a guaranteed rate, for the power that their arrays produce.
In return, solar power developers must use a defined percentage of Ontario content in their projects.
Stern said the U.S. venture will use some equipment from Ontario suppliers who got into the solar component business because of the Green Energy Act.
That includes the racks that support the panels, and the inverters that turn the direct current produced by the solar panels into alternating current used on the electric grid.