Wednesday, June 29, 2011

Constellation Energy's Investment in Small Solar Installer Is a Big Deal: Here's Why

Constellation Energy, a major energy company that owns BGE utility, and sells electricity and gas nationally has bought an equity position in Astrum Solar.  See http://www.solarbuzz.com/.

Why is this a big deal?

In the world of big business, Astrum Solar is small fry, installing solar residential systems in the northeast, including Pennsylvania.  But this is a big deal, because Constellation Energy understands that the energy business is about to be turned on its head by solar just as it has been by shale gas.

And Constellation Energy knows that companies that own utilities--gas, electricity, water--are uniquely positioned to become major players in the rapidly growing solar installation business.  Right now solar installation companies are very small but the solar market is exploding. 

Any company that can get to scale first in the solar installation business will have a substantial first mover advantage and will have high margin sales for an extended period.  The solar business just in the USA is likely to be close to $10 billion this year.

Constellation Energy sees these strategic opportunities and is moving to realize them.  Why does it see the opportunity when others do not?  Good management in part, and Constellation Energy does solar installations for commercial and industrial customers, giving it direct experience with the declining costs of installation and the burgeoning solar market.

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