Spruce Power Holding Corp. has acquired a portfolio of more than 2,400 residential solar systems and contracts from a publicly traded, regulated utility company for $20.9 million. The acquisition closed on Aug. 18.
The acquired portfolio consists of residential solar systems in California, New Jersey and Massachusetts, with an average remaining contract life of nearly 11 years. Spruce expects the portfolio to generate about $4 million of annual run-rate revenue. Prior to the acquisition, the company was the third-party services solution provider for the portfolio, which allows for efficient, low-cost integration into Spruce’s existing portfolio of home solar assets and contracts.
With the acquisition, Spruce’s total portfolio grows to over 75,000 home solar assets and contracts, representing almost 50% growth in less than a year since the company’s transition into a pure play owner and operator of residential rooftop solar assets in 2022.
“With Spruce already providing comprehensive servicing solutions to this acquired portfolio, our team is very familiar with the portfolio and its strong operating history and financial performance,” said Christian Fong, CEO of the company. “This investment will provide Spruce an attractive return on capital and represents continued execution of our growth strategy that enables such low customer acquisition cost.”
Spruce funded the acquisition purchase price entirely through proceeds from the concurrent upsizing of its Spruce Power 2 credit facility (SP2 Facility). Strong performance to date of legacy Spruce assets in the SP2 Facility collateral pool resulted in the company’s ability to raise incremental debt financing on the underlying assets during the upsize process, thus offsetting any cash equity needed for the acquisition purchase price.
“This is an exciting acquisition where Spruce could self-fund growth by tapping the operational excellence of the company’s asset management teams and strong performance of our existing assets,” said Sarah Wells, chief financial officer for the company. “With this acquisition, our financial outlook continues to improve, and we are tightening our expectation for annual run-rate business cash inflows to between $120 million and $130 million.”
Spruce is an owner and operator of distributed solar energy assets across the United States. The company provides subscription-based services that make it easy for homeowners to benefit from rooftop solar power and battery storage. Spruce’s as-a-service model allows consumers to access new technology without making a significant upfront investment or incurring maintenance costs.
Listen to more in-depth conversations on Solar Builder’s YouTube channel
Our most popular series include:
Power Forward! | A collaboration with BayWa r.e. to discuss higher level industry topics.
The Buzz | Where we give our 2 cents per kWh on the residential solar market.
The Pitch | Discussions with solar manufacturers about their new technology and ideas.