While working on Silicon Valley’s Solar Power Play for the magazine  I spent a fair amount of time poking around both PV panel manufacturer SunPower (SPWR) down in San Jose, and across the SF Bay in Berkeley at PV mounting hardware and integrator PowerLight. PowerLight was clearly one of those companies setting up for an IPO, probably in 2007, given its revenue growth and momentum in the marketplace.

One of its biggest suppliers, SunPower took PowerLight out today for $265 million in cash upfront plus a retention carve-out of $67.5 million vesting over 2 to 4 years. It’s an interesting deal because it signals a consolidation that is likely to accelerate among U.S. based solar companies as they battle much larger Japanese and German competitors eager to tap the U.S. and global market. The energy industry is all about scale, and this gets SunPower a bit more of it. Wall Street sent SunPower’s shares up 40 cents, or 1 percent, to $38.54.

The specific play for SunPower and PowerLight is likely a much tighter
focus on products. In the early days, a company like PowerLight had to
offer installation services and project management because there was no
one else to do it. That is not the case today, with services companies
like Borrego Solar, and Akeena Solar for example, trying to get to some
scale on the services/install side. PowerLight gets bought, therefore,
for its mounting hardware technology, something that is very
complementary to SunPower’s module technology. “You are seeing the
market start to bifurcate into its unique elements in the solar energy
industry,” says Mark Culpepper, EVP of SunEdison, which is essentially
a utility selling solar power and has bought gear from both SunPower
and PowerLight. “The people who are focused on service are focused
there, and the people who are focused on products are really beginning
to tune their forks there. This is more evidence.”