Fireside Chat Introduces New CEO and the Company's Competitive Servicing Platform
We recently hosted Chris Hayes, the new CEO at Spruce Power, for our first fireside chat with the company. Spruce is a leading owner-operator in residential solar. We discussed the CEO transition, the company’s competitive advantages, including its unique integrated servicing platform, capital-light strategy, opportunistic approach to M&A, and other topics. This report contains a transcript of the fireside chat from April 26, 2024, which can be accessed on demand. The link is accessible in our full report. Hayes is a veteran in the energy transition space, with a demonstrated track record of building successful businesses. He has served on the board at Spruce since 2018, including as the company’s chairman since January 2023. Hayes founded Altenex in 2010 and, under his leadership, the company closed $4 billion in transactions before being sold to Edison International in 2015. He is also a founder and managing partner of Alturus Energy. Spruce servicing program viewed as a key competitive advantage. Hayes said he is grateful for the previous CEO’s leadership. He noted that Spruce has a world-class management team that has spent several years building one of the largest and best-run full-wrap servicing programs. This includes billing, collections, maintenance, management of renewable energy credits, and other services. Hayes thinks this infrastructure “moat” is among the key factors placing Spruce in a competitive position from a servicing and M&A perspective. Spruce has an experienced origination team and takes an opportunistic approach to M&A. Hayes said the company seeks only high-return portfolios and will never acquire simply for the sake of growth. Spruce has acquired 13 portfolios in the last four years and now owns the cash flow from approximately 75,000 residential solar systems. Still at this point, he thinks Spruce is only in “the “first couple of innings” of a mega trend. Spruce is positioned to add incremental portfolios at increasingly attractive corporate return profiles as benefits of servicing scale are further realized. According to Hayes, servicing solar customers over the long term presents challenges to the broader industry. This inherently presents M&A opportunities for Spruce as underlying owners look to recycle capital and allows Spruce to further leverage substantial investment to date in its servicing platform and prospectively achieve enhanced IRRs on incremental acquisitions.
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