Why Edison Wants A Piece Of The Rooftop Solar Business

Edison International, the energy company that owns one of the largest utilities in the country,on Monday announced the purchase of solar company SoCore Energy.

The purchase deepens Edison's investments in solar energy development and enables it to compete for new energy customers. The electric power producer and distributor, which owns Southern California Edison, took an equity stake in solar power financing startup, Clean Power Finance , earlier this year. That move was uncommon in the electric power industry. Power companies have gradually waded into the world of solar power investment in recent years, but they more often opt to finance large power plants or rooftop solar installations and collect revenues from long-term power sales contracts with utilities and in some cases with business or residential customers

MidAmerican Energy, controlled by Warren Buffett's Berkshire Hathaway, plans to pay up to $2.5 billion for a 579-megawatt solar power plant, which is under construction by SunPower in California. MidAmerican also is owner of a 550-megawatt solar power project under construction by First Solar in California. Other power companies that have bought solar power projects to sell electricity to local utilities include NextEra Energy Resources, Duke Energy, Exelon and NRG Energy.

The SoCore acquisition will give Edison a foothold in the business of installing and operating rooftop solar electric systems for business and industrial customers. SoCore, founded in 2008 and based in Chicago, has completed 80 projects in 11 states, Edison said. SoCore's customers include Walgreens and Ikea. Edison declined to disclose the purchase price for SoCore.

Rooftop solar also is sometimes called "distributed solar" to distinguish it from the traditional, centralized power plant model that power companies have used for decades to supply electricity to businesses and consumers. The commercial and residential rooftop solar businesses have grown tremendously in recent years thanks to cheaper solar panels and financing options, such as leases, that remove the need for business and homeowners to pay for the expensive upfront cost of buying and installing solar equipment.

Desires by businesses to choose cleaner power to cut their carbon footprint also are driving the growth. So do government incentives such as rebates and tax credits that promote rooftop solar.

The rise of rooftop solar means dwindling revenues for power generation and delivery companies, unless they get into the game themselves.

Edison's entry into the commercial and industrial solar business also will pit it against fellow energy producers such as NRG, which bought Solar Power Partners in 2011 to tackle the distributed solar market. Other companies that have made distributed solar part of their core business include SolarCity and SunEdison