By Jennifer Kho

In another sign of a solar industry consolidation, GroSolar said Wednesday it has acquired Energy Outfitters.

The White River Junction, Vermont-based solar distributor and installer wouldn’t disclose the price, but said it is doubling its revenue to about $25 million by buying Energy Outfitters, a solar distributor in Grants Pass, Oregon.

The deal could be another sign that a solar buying spree is coming as gasoline prices fall and solar supply—and competition—grows. Nick Lenssen, a program director at Energy Insights, said buys such as these will put distributors like GroSolar in a better position with suppliers because they will be able to buy larger volumes and possibly get better discounts.

“The industry at all levels is very fragmented still,” said GroSolar CEO Jeff Wolfe. “There’s a lot of market desire, and I’m not sure there’s a lot of market savvy. It doesn’t make sense to buy up everybody.”

Last month, solar manufacturer SunPower bought one of the largest solar integrators in the United States, Powerlight, for $265 million (see SunPower Buys Powerlight: $265M.)

Tongues wagged, predicting the buying would not end there (see Solar’s Silicon Shakeup.)

Solar manufacturers margins and profits have fattened during a worldwide silicon shortage that has restrained supply while demand grows. That puts them in a good position to buy.

There’s also plenty of motivation, said Mark Cox, CEO of New Energy Fund, after the Powerlight deal. As a worldwide shortage of silicon eases, solar manufacturers could see their margins shrink while some project managers’ and installers’ margins fatten, he said.

But the Energy Outfitters deal makes it clear that solar distributors aren’t going to leave all the buying to the manufacturers—or to the big guys.

“This is just one more step in the road,” said Neal Dikeman, a partner at Jane Capital Partners, of the Energy Outfitters deal, who said he expects more such announcements in the next year.

“You’ve got $11-million companies trying to do business, and they can’t get any purchasing power,” he said. “We’re going to enter a [period of] a lot of competition in the next years, so you’ve either got to get bought or get bigger.”

Michael Liebreich, CEO of London-based research and consulting firm New Energy Finance, said he is expecting a huge shakeout in four or five years that could be risky for startups as they decide whether to buy or sell (see Solar Consolidation Trend Kicks Off).

“The danger is thinking you’re a champion just because things are going well at the moment,” he says. “If they think they’re [a company that buys other companies] and they’re not there yet, they lose access to capital and die.”

GroSolar chose to buy Energy Outfitters because they have similar cultures, and because Energy Outfitters has a strong presence in the U.S. West Coast and Canada, giving GroSolar—until now focused mainly in the Northeast--a “true North American presence.”

With this deal, GroSolar will be one of the top five distributors in the United States, he said.

But Mr. Wolfe denies GroSolar acquired Energy Outfitters to stave off competition, instead saying it’s an opportunity to become a national brand.

He points to the Congressional change to the Democrat party, as well as several governor races that switched to Democrats.

“Both sides of the aisle are talking about solar energy now, as well as people [at the state level,]” he said. “All these elements are helping to create the increased public presence and demand for solar power. If we have great national programs coming out, there’s going to be a mad scramble. We’re working to get ahead of the curve, to be ready for federal and state legislation, to be the leader rather than the follower.”

Contact the Writer: jkho@redherring.com