What the biggest-ever solar company acquisition means for the future

On July 6, San Francisco-based Sunrun, the biggest residential solar power company in the US, acquired one of its main rivals, Vivint Solar, in an all-stock deal worth $3.2 billion. It’s the biggest consolidation in the solar industry’s history, posing a threat to Tesla, the number-two competitor for rooftop panels.

In a statement, the companies emphasized that the move was motivated by the opportunity to cut costs—up to $90 million per year—by merging offices, squeezing out supply chain inefficiencies, and curbing redundant R&D. But it may also be an effort to stay ahead of a subtle but important shift in the US residential solar market: Today, most customers buy their own panels, rather than leasing them.

In the early days of rooftop solar, panels were too expensive for many homeowners to buy outright. A typical home solar setup in 2010 could cost more than $50,000—hard to justify for anyone but diehard environmentalists. So to make the purchase more palatable, companies like Sunrun and Vivint began to offer various kinds of leases.

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