Renewable energy solutions Suntuity Renewables will combine with special purpose acquisition company Beard Energy Transition Acquisition to create a combined company with a pro forma enterprise value of $249m
Suntuity is an end-to-end residential solar company in the US. (Credit: Bruno /Germany from Pixabay)
Suntuity Renewables, a prominent provider of renewable energy solutions, has recently announced its definitive agreement with Beard Energy Transition Acquisition Corp, a special purpose acquisition company (SPAC). This agreement marks a significant milestone for Suntuity as it paves the way for the combined entity to go public.
Following the completion of the transaction, the merged organisation will adopt the name ‘Suntuity Inc.’ (New Suntuity). Moreover, the Class A common stock and warrants of the company are anticipated to be listed on the New York Stock Exchange under the new ticker symbols ‘STY’ and ‘STY.WS,’ respectively. This move will enhance the visibility and accessibility of Suntuity’s shares to a broader range of investors.
Suntuity stands as one of the foremost end-to-end residential solar companies in the country, boasting an impressive track record. With more than 9,500 residential system installations across 25 states as of April 2023, the company has established itself as a key player in the industry. Since its expansion into residential solar in 2017, Suntuity has actively pursued opportunities and has successfully originated over 200MW of projects. Furthermore, the company has diversified its offerings, providing electrification solutions, installing power generation and storage systems, and facilitating third-party financing solutions for residential customers.
Suntuity’s strong position in the market can be attributed to its valuable industry relationships with top-tier suppliers and financing partners. These partnerships have greatly contributed to the company’s success, allowing it to maintain a leading role in the residential solar sector. Notably, Suntuity has achieved an impressive compound annual growth rate (CAGR) of 26.7% in installations over the past three years. Additionally, the company has amassed a substantial backlog of projects, amounting to a robust $55m and encompassing over 1,100 ongoing initiatives. These figures reflect Suntuity’s solid reputation and consistent demand for its services.
The residential solar market in the US is experiencing continuous expansion, driven by homeowners who are increasingly recognising the cost-saving advantages of solar energy. Additionally, tax incentives provided by the Inflation Reduction Act have further encouraged the adoption of residential solar systems. These factors, coupled with the potential adverse effects of climate change on the power grid and the significant growth in electric vehicle sales, have led to a notable transformation in the overall energy landscape. Residential solar and energy storage have emerged as focal points of this shift.
Suntuity, in response to these market dynamics, employs a strategic combination of in-house and outsourced solutions and capabilities. By leveraging this approach, the company aims to optimise its growth trajectory, enhance profitability, and improve service efficiency. Suntuity is committed to scaling its operations in a financially responsible manner, ensuring that its expansion aligns with sustainable business practices and fiscal considerations.
Management Commentary
“Since 2017, Suntuity’s mission has been to support the transition to a 100% clean and renewable energy future by simplifying residential solar power,” said Dan Javan, President and CEO of Suntuity. “In taking this next step to become a publicly traded company, we intend to accelerate our growth, broaden our focus to include comprehensive home electrification solutions and services across the country, and establish ourselves as a significant industry participant in the renewable energy transformation. The Beard team shares our vision to support the clean energy transition infrastructure buildout, and we’ll be working with them to close this transaction and execute against our long-term growth plans.”
“We are looking forward to partnering with Dan and his team to grow Suntuity,” said Gregory A. Beard, CEO of Beard. “When searching for a potential partner in this transaction, we sought to identify a high-growth business in the renewable energy space with a clear path to scalability and a public-ready management team; we believe Suntuity satisfies each of these criteria and much more. Dan and his team are revolutionizing residential solar access in the United States, and we look forward to supporting them in their mission through this combination.”
Suntuity Highlights
Substantial and Growing Addressable Market: Projections from the industry indicate that the solar market is set to grow to 11.5 GW by 2033. Despite these forecasts, the current total number of solar deployments remains a small fraction of the potential market, with approximately 94% of single-family homes in the US still lacking solar installations.
Broader Energy Storage Tailwinds: The demand for residential home energy storage, which complements home solar systems, has witnessed significant growth alongside the increase in home solar installations. The sales of batteries in conjunction with solar systems are expected to experience rapid growth until 2026. The limited supply of batteries has been a primary constraint in recent years.
Compelling Government Incentives: The Investment Tax Credit, extended in 2022 as part of the Inflation Reduction Act, has provided stability and investment opportunities for solar and energy storage in the US. Residents installing solar and/or energy systems are eligible for a 30% tax credit, making it an attractive incentive.
Significant Existing Footprint with Future Visibility: Suntuity has successfully initiated around 21,000 projects since 2017, spanning across 25 states. This track record translates into a compound annual growth rate (CAGR) of 26.7% for installations over the past three years. As of April 2023, the company has a backlog of 1,100 planned projects, amounting to a substantial value of $55m.
Defined Growth Plan Supported by Tier One Relationships: Suntuity has gained considerable momentum in generating new orders and has strategically planned its geographic expansion. Installations have experienced a noteworthy 54% year-over-year increase in the first quarter of 2023, while the company has expanded its state coverage to 25 states. The strategic partnerships established with top-tier suppliers and financing partners mitigate execution risks and enhance operational efficiency.
Experienced Industry Leadership: Suntuity benefits from an extended management team that possesses a collective experience of over 100 years in solar and related industries. The team includes senior executives who have held leadership positions in various industry peers, contributing to Suntuity’s expertise and industry knowledge.
Transaction Overview
Under the terms of the business combination agreement, Beard Energy Transition Acquisition Corp. (Beard) will acquire Suntuity at a pre-money equity value of $190m. As part of the transaction, the newly formed combined company, New Suntuity, will issue 19.0 million new shares to the existing members of Suntuity.
The current members of Suntuity will exchange their entire equity interests in Suntuity for equity in New Suntuity. Cash proceeds from the transaction will be derived from Beard’s trust account, taking into account any redemptions made by Beard’s public stockholders. In addition, Suntuity has already secured $15m in funded debt financing in connection with the transaction.
The boards of directors of both Beard and Suntuity have unanimously approved the business combination, which is expected to be finalised in the fourth quarter of 2023, subject to regulatory and stockholder approvals, as well as other customary closing conditions.
Following the completion of the transaction, the senior management team of Suntuity is expected to continue serving in their existing roles within the combined company. Based on the assumption of no redemptions by Beard’s public stockholders, the current members of Suntuity are projected to own approximately 40% of the combined company upon the close of the transaction.