Schneider snaps up solar marketplace EnergySage, aims to electrify homes

EnergySage, a scrappy startup with a platform that lets customers comparison shop for rooftop solar, just got acquired by Schneider Electric, the vast France-based energy hardware and services firm.

Schneider sells industrial automation tools and large-scale microgrids-as-a-service, but it also makes the circuit breakers and electrical panels that form the heart of a home’s electricity system. The 186-year-old company has recently positioned itself as a leader on sustainability, helping customers get the tools they need to eliminate carbon emissions.

EnergySage, meanwhile, runs a digital marketplace where homeowners who want to install solar and batteries can shop among multiple proposals from a pool of more than 500 vetted installers. It recently launched a community-solar marketplace, which helps people join community solar programs that make clean energy accessible to those who can’t put panels on their roofs in states with the necessary policies in place.

The marketplaces will continue to operate independently under Schneider ownership, EnergySage founder and CEO Vikram Aggarwal told Canary Media. He pledged to continue being an ​“unbiased trusted adviser to the end consumer” and to remain agnostic among the various energy products and installers.

Schneider assured the EnergySage leadership that it supports the startup’s model. ​“The message was, ​‘Do what you were doing at a faster pace and bigger scale,’” he said. ​“If we can succeed at a larger scale, our impact will be very large. If EnergySage grows, all our partners grow.”

Those ambitions start with expanding the flagship rooftop solar platform and the newer community solar service. But the startup won’t stop there: It aims to broaden into the full range of home electrification products, including heat pumps, electric vehicle chargers and smart connected-home devices. It could also add financing services, and eventually help customers connect their devices into networked programs that allow them to earn money by helping the grid.

There’s no guarantee that success in the rooftop solar market will lead inexorably to cross-selling myriad other home energy devices. But a growing cohort of companies is betting that rooftop solar will be the gateway that will lead consumers toward buying other smart electric systems.

As a marketplace, EnergySage makes money when a seller closes a deal on its platform. If that deal flow swells to encompass the full breadth of home-electrification products and services, EnergySage’s revenue would follow.

Anatomy of a deal

The EnergySage marketplace launched in 2012, initially bootstrapped by Aggarwal.

The company had raised only $8 million since then, plus some government grants from the likes of the U.S. Department of Energy. Even with that lean funding, EnergySage grew to employ more than 70 people. Customers bought more than $600 million worth of solar and battery storage on the platform in 2021.

Now, with the acquisition complete, the Boston-based company has another 50 open job positions, Aggarwal said.

The relationship with Schneider started in 2020 when the conglomerate invested in EnergySage as part of a program to provide funding to Massachusetts-based clean energy companies amid the upheavals of the Covid-19 pandemic.

EnergySage stayed in touch as it went out for a Series B fundraising round last year, talking with Schneider’s venture arm as well as other venture capital firms, growth equity investors and strategic backers. But then Schneider made an offer to buy the company outright. While other investors offered ​“dollars and cents,” a partnership with Schneider promised something more, Aggarwal said.

“With Schneider, it not only comes with an investment but it comes with a lot of other resources at our disposal to grow our company much faster than we could have with just venture capital money,” he said.

Aggarwal did not disclose what Schneider paid in the deal. He did say, ​“It was an excellent exit” and that the startup’s investors, himself included, ​“are loving life.”

Will the smart-home jackpot materialize?

Schneider Electric and EnergySage bonded over a shared vision for converting homes to run on clean electricity.

“We really want to accelerate the adoption of the broader electrification of your home, your building, your transportation,” Aggarwal said. ​“Schneider’s goal is to drive pretty aggressive electrification and hence decarbonization.”

This thesis for expansive home electrification is popping up across the solar sector. Sunrun, the largest national solar installer, is partnering with Ford to deliver chargers and home backup power to customers of the forthcoming electric F-150 pickup. PickMySolar, a competing online platform for comparing solar quotes, recently rebranded as Electrum, a ​“home electrification marketplace.”

The vision of a digitally connected, energy-efficient smart home has lured investors and startups for years, but mass-market appeal remains elusive. Solar has yet to attract more than a few percent of the potential pool of customers, and other electrification products such as heat pumps and induction stoves are even earlier in the consumer education process. Just because someone signs up for a $30,000 solar deal doesn’t necessarily mean they want to spend another $20,000 on fancy electric appliances while they’re at it.

But EnergySage is in touch with solar buyers and installers, and it often sees customers experience something of an epiphany once they have gained the ability to produce their own energy.

“Once they get into this smart-home movement, they start going from one product to the next product,” Aggarwal said.

It’s already common for solar buyers to size their system not just to match current consumption, but also to anticipate and prepare for near-term purchases like an electric vehicle or a heat pump. It’s easier to build bigger initially to supply future driving or heating needs than to add on panels years later.

“Is it a mass-market need? Not in 2022, but we’re playing the long game here,” Aggarwal said.

As EnergySage expands its offerings, it may run into territory where Schneider’s hardware competes with products that other brands offer on its marketplaces. EnergySage will need to thread the needle of maintaining its independence while leveraging its patron’s resources and market knowledge to grow.

Aggarwal stressed that the proposals sent through the marketplace come from independent installers and that his company’s success depends on giving customers unbiased energy advice as they navigate the options.

“We reach out to all kinds of installers encouraging them to join our network,” he noted. ​“We have no control over what product lines they carry.”