by Jason Deign, Solarplaza
Competitors are piling in to take advantage of a customer fallout from the merger mishap of one of America’s biggest solar monitoring companies.
Solar plant monitoring system vendors including AlsoEnergy and Solectria have pounced following recent news of a failed merger and layoffs at Draker Labs.
AlsoEnergy of Boulder, Colorado, sent out mailers promising “Easy options for Draker migrations.” Meanwhile Massachusetts-based Solectria took to Twitter with an invitation for customers to “Make the switch from Draker to SolrenView today!”
The feeding frenzy followed the news that Draker was shedding jobs in the wake of a failed merger with Inaccess, a UK-based, but globally active monitoring systems provider. Draker, which had meanwhile secured another suitor, rushed out a press release at the end of August.
“Draker announced to its customers on August 27, 2015 that it had reached an agreement with a leading renewable solutions provider to continue its business and services to clients without interruption and to fulfil new installations in its backlog,” it said.
In July, Draker and Inaccess announced “a strategic alliance for the world’s largest and most comprehensive portfolio of monitoring and management solutions for commercial to utility-scale solar power plants.”
According to the announcement, Draker and Inaccess were due to forge “a strategic cooperation agreement” to combine the technology platforms used across 5 GW of solar power generation in 3,400 sites and five continents. It is now understood the agreement was effectively a merger.
Neither party has disclosed why the deal fell through, but a breakdown in negotiations appears to have prompted the dismissal of “most or all of the company’s employees,” according to reports.
Draker’s misfortunes seem to have been short-lived, however.
“Draker was in limbo for about a week until a 'white knight' investor came in to save the day,” said Cedric Brehaut from SoliChamba Consulting, author of the GTM Research report Global PV Monitoring: Technologies, Markets and Leading Players.
“Draker told their customers that they are resuming operations immediately and re-hiring the staff while the acquisition is being finalised,” Brehaut said.
So far the identity of Draker’s buyer is unknown, although there is speculation that it might be large downstream solar player with ambitions to bring the Draker monitoring technology in house. Draker has advised it expects the sale to close in mid-September.
In any event, the episode represents an unlucky turn of events for a company that was recently named the number-one US supplier of solar monitoring software for plants between 1 MW and 5 MW.
Draker was founded in 1999 and enjoyed major success at the beginning of this decade, notching up an annual growth rate of 400% before 2011 and raising USD$8 million to finance a merger with Solar Power Technologies in 2012.
The deal with Inaccess was seen as highlighting a trend towards further consolidation in the PV monitoring arena. Brehaut says there should be more to come.
“I believe that consolidation is inevitable,” he said. “With the pressure on price, providers must reduce costs by increasing scale. Hardware costs decrease as production ramps up, and software is practically a fixed cost to be divided by the number of plants or megawatts monitored.”
As a result, vendors must either follow a very fast organic growth path or combine forces with other players, “which seemed to be the intent of the Inaccess-Draker strategic partnership,” said Brehaut.
“In my opinion the industry has not paid enough attention to the bankability of their monitoring providers: most of these companies are small and privately held, and the majority of monitoring platforms use proprietary protocols between on-site hardware and remote servers.”
Draker's recent troubles “are likely to increase concerns about these risk factors across the industry,” he commented.
· Monitoring systems will be covered in depth at Solar Asset Management North America on 16 and 17 March 2016 in San Francisco, USA.