REC’s CEO Paul Detering Excited About the Future of Commercial Solar

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As Sunrun acquires REC Solar’s residential business, REC positions itself to focus on the growing commercial market. PV Solar Report discusses the changes with REC’s new CEO, Paul Detering.

This week’s news of REC Solar shedding its residential arm to Sunrun may have come as a surprise to some, but the idea of focusing on commercial solar had been germinating for some time. For REC, it was a natural move to separate their residential and commercial businesses. We caught up today with REC’s new CEO, Paul Detering, to get more insight on the changes.

According to Detering, who came to REC from Tioga Energy, there had long been a recognition that residential and commercial solar are two very different businesses. “The customers are very different, and the projects are very different,” he said. So REC had been considering how to divide the two businesses to create maximum value.  

 

It just happened that the REC residential business saw an increase in value last year, with its growth outpacing that of residential solar overall — which is saying a lot these days. That only accelerated the need to divide the two businesses. As Detering noted, “Business is complex but also really simple. It makes it much easier to operate the business if we focus on our commercial customers. The two businesses take different core competencies.”

 

REC has a strong base to build on, with over 100 MW of solar installed at more than 350 projects in 14 states. In many cases, REC continues to operate the projects. Customers include consumer brands like IKEA, governments, and school systems.

 

While Detering brings a strong background in PPA financing from Tioga, for REC, he says, “The focus is to give the customer what is best for them.” For some customers the best option might be buying with cash, which could mean some form of loan. Others might prefer a lease or PPA. Detering is well-positioned to strengthen REC’s PPA offerings, but he’s interested in other financing solutions as well and believes there’s a lot of opportunity to standardize and optimize financing.

 

What are some of the other financing options? They will “range from cash,” he said, “to the more ephemeral, like on-bill recovery (OBR), which is available in some jurisdictions through the customer’s utility bill.” Commercial PACE, Detering thinks, has real promise going forward. It hasn’t run into as many obstacles as its residential counterpart, and many banks are comfortable with this lending opportunity.

 

While REC will experience some growth in terms of support and shared services like finance, IT, and HR, Detering said, for the most part it will be “business as usual.” The core team, he noted, was already in place.  

 

And the team, like Detering, is excited about REC’s future.

 

“Distributed generation,” Detering said, “is the most exciting part of solar that’s expected to grow. Commercial solar in the U.S. is at about 1 gigawatt installed, and that’s expected to grow about 47 percent, according to GTM, for 2014. It’s expected to grow at a high rate in the next three years, too. It’s not often that you can operate in an industry growing 50 percent a year. REC is ideally positioned to take advantage of that: we have a strong reputation, and a strong team. This team has been around a number of years and is excited about this.”