When it launched 12 years ago as a solar panel installation spin-off business, Pasadena-based SunGreen Systems Inc. could have tried to compete with major players in the residential solar rooftop market. Instead, SunGreen chose a different, less-trodden path: specializing in installing solar panels and providing energy management consulting services for small and mid-sized commercial customers.

“All of the government subsidies and major incentives were geared toward the residential market, and everyone was rushing there,” said John Hoffman, SunGreen’s chief executive, who joined shortly after the company’s founding. “The banks weren’t lending for commercial solar rooftop installers, and few commercial customers were willing to pay for solar without incentives.”

But SunGreen chose to stick with the type of customer base of its founding company, Pasadena commercial real estate investor and developer Lindom Co. That meant installing solar panels on rooftops for small and mid-sized businesses and commercial building owners.

Eventually, to make these installations more attractive for customers, SunGreen added energy management services to help its customers use energy more efficiently. These services include energy use audits, installation of reflective roof coatings and — more recently — battery storage systems that can also regulate the flow of energy.

“The idea was — and is — to integrate the energy management with the solar, to maximize the energy savings for the customer,” Hoffman said. “Instead of just installing a huge solar system, we will also retrofit lighting or install smart systems that react automatically to changing demand levels. That, in turn, could allow for installation of smaller photovoltaic panel systems, saving the customer money.”

SunGreen was one of the early adopters of this holistic approach to commercial solar installation; since then, this strategy has become much more common, according to Bernadette Del Chiaro, executive director of the California Solar & Storage Association, an industry trade group in Sacramento. SunGreen is a member company.

“Customers are not just buying solar energy, they are also buying higher-quality energy services,” Del Chiaro said.
This approach was made much easier with the widespread availability six or seven years ago of battery storage devices. These devices allowed customers to time-shift some of their energy usage to take advantage of windows during the day with lower power rates and to make sure sufficient power is always available for the customer.

Boutique status

By taking this approach, SunGreen chose not to go the high-volume route of major residential solar panel installers, such as San Francisco-based Sunrun Inc., which on its website says it has more than 600,000 customer subscribers that generated a total of $122 million in revenue during the second quarter.

SunGreen also chose not to pursue mega-solar rooftop commercial and institutional projects, like its occasional competitor PermaCity, the downtown Los Angeles installer recently acquired by Catalyze Holdings, an independent renewable power producer in Boulder, Colo. PermaCity in 2017 installed 50,000 panels atop a huge warehouse complex of several hundred thousand square feet in San Pedro.

“We’ve chosen to serve what we consider an underserved market of commercial and industrial buildings that have about 50,000 square feet of space,” Hoffman said.
As a result, SunGreen has intentionally remained a small firm; the company has only eight full-time employees and brought in between $8 million and $10 million in revenue last year.

Del Chiaro said SunGreen is not alone in its strategy, especially in recent years.
“SunGreen has chosen to serve small and mid-sized commercial clients,” she said. The boutique, all-services approach is common in this segment,” she said.

99 Ranch project

SunGreen has not shied away entirely from higher-profile projects, however. In early October, the company wrapped up a rooftop solar/battery storage project for the Buena Park headquarters complex of Tawa Group Properties, which does business as 99 Ranch Market.

The project included the installation of nearly 3,300 solar panels on the roofs of its headquarters and distribution warehouse complex. The panels were laid out in a way that showed the numerals “99” on one of the roofs.

The solar panel system, which includes a battery storage unit, can generate nearly 1.3 megawatts of electricity when running at full capacity.

According to Sandy Jih, administration manager for Tawa Group, the company in 2019 embarked upon a green business initiative and sought competitive bids to place solar panels atop its headquarters/warehouse roof; SunGreen won the bid process.
One of the challenges SunGreen faced on the 99 Ranch project was working on it while all the administrative and warehousing functions continued.

“Because so much equipment and materials needed to be moved from the ground to the rooftops, a way had to be found to complete the work while avoiding oncoming traffic or other obstructions,” Jih said. “The SunGreen team was very flexible, reporting as early as 4 a.m. each day to work around our schedule and operations.”
While SunGreen’s system has been operational for only a few weeks, Jih said that if it meets expectations in terms of performance and money saved Tawa/99 Ranch Market will consider deploying additional SunGreen systems on some of its other facilities, including its markets.

Supply chain issues

SunGreen’s Hoffman said that when the Covid-19 pandemic hit in March 2020, work on all of its projects came to an immediate halt. But that halt was short-lived because on April 27, 2020, Gov. Gavin Newsom’s administration issued a clarification to its pandemic orders that classified solar panel installers as “essential workers.”

Now, the main pandemic-related challenge for SunGreen and the entire solar panel industry is dealing with supply chain interruptions.
Del Chiaro said there have been issues finding enough qualified workers. And there is now an acute shortage of battery storage units. This problem hits SunGreen particularly hard because battery systems are essential for its customer energy management programs.

Looking ahead, Hoffman said, SunGreen is aiming for “slow, careful growth” in the quarters and years ahead.
“We don’t see huge sudden moves or a whole series of acquisitions,” he said. “Rather, we are planning for steady organic growth and careful consideration of any acquisition opportunities.”

On the organic growth side, Hoffman said there is some opportunity following last year’s enactment of a state mandate that new homes and small multifamily complexes have solar panel systems built in during construction.
“We’re also anticipating a similar mandate will pass that applies to most commercial construction,” he said. “If that happens, it will provide a big boost for us.”

Locally, he said, a mandate from the South Coast Air Quality Management District that industrial warehouses offset emissions from vehicular traffic should also translate into more business for SunGreen.
“The primary way to offset … emissions is to install solar and electrify everything,” he said.