Target Information

Arcadia and Perch Energy have announced a significant partnership to form a new venture that will unify their community solar businesses, creating the largest standalone platform for community solar acquisition and management in the United States. The new entity will be majority-owned by Arcadia and will be directed by Bruce Stewart, the current President and CEO of Perch, who will take on the role of CEO in this joint venture. Kiran Bhatraju, the CEO of Arcadia, will also maintain a position on the Board of Directors, underscoring the collaborative leadership between the two companies.

This merger is a strategic move, with both companies having established themselves as leaders in the community solar sector. With extensive experience in energy distribution and management, they have a proven track record of delivering notable returns on investments for their solar developer partners and providing exceptional customer service to a diverse clientele, which includes commercial, residential, and low-to-moderate-income (LMI) households.

Industry Overview

The landscape for community solar in the United States has evolved over the past decade, gaining traction in various states where policy frameworks have enabled its expansion. Community solar provides a compelling model whereby homeowners, renters, and businesses can easily participate in local solar projects, resulting in credits on their electricity bills based on the energy produced. This model is particularly beneficial, as it enables increased access to renewable energy while concurrently strengthening the electric grid.

Community solar projects are increasingly recognized for their ability to expedite the deployment of renewable energy, as they can be constructed four times faster than conventional utility-scale solar installations. This rapid scalability presents significant opportunities for engaging low- to moderate-income communities with clean energy initiatives, bridging gaps that traditional solar options often overlook.

As more states implement supportive policies for community solar initiatives, the demand is expected to surge. This expansion aligns with the growing commitment across municipalities and businesses to enhance clean energy infrastructures, driven by a collective push towards sustainability and resilience in energy distribution.

Moreover, the collaboration between Arcadia and Perch signifies industry consolidation trends as firms strive to create more robust networks to support solar developers and asset owners. This endeavor positions the new venture to not only thrive amidst competitive pressures but also solidifies its role as a key player in the evolving community solar sector.

Rationale Behind the Deal

The merger between Arcadia and Perch is driven by a shared vision of expanding community solar adoption with a robust financial foundation. The collaboration aims to combine their respective strengths—Arcadia's customer acquisition, data management capabilities, and Perch's extensive experience with commercial clients and quality service delivery. With a combined managerial strength and enhanced technological resources, the new venture aims to streamline operations while enhancing customer benefits.

Furthermore, the venture is strategically positioned for growth, with over 3 GW of solar capacity under management across 1,000 projects in 16 states. This includes serving roughly 300,000 residential customer equivalents, illustrating significant market penetration and highlighting the expansive reach the venture will possess to meet growing customer demands.

Investor Information

Arcadia has emerged as a renowned utility data and energy solutions platform, recognized for managing one of the country's leading community solar programs. Their robust data platform, coupled with AI-powered analytics and a wide-ranging partner network, enables Arcadia to provide comprehensive energy management solutions tailored to the needs of enterprises across various sectors.

On the other hand, Perch Energy has distinguished itself as a premier community solar servicer in Boston, boasting an impressive history of generating significant savings for customers, amounting to over $40 million. Their clean energy technology platform simplifies enrollment for potential community solar participants while facilitating various services for solar project developers to maximize asset returns.

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The merger between Arcadia and Perch Energy represents a well-timed strategic alignment within the flourishing community solar sector. By combining their resources and expertise, the new venture is set to dominate this space, providing scalable, accessible renewable energy solutions to an expanding customer base. The management team's commitment to leveraging each company’s strengths bodes well for navigating the complexities of the solar energy market.

Additionally, the expected growth in the community solar market presents an attractive investment opportunity. Given the legislative support and a surge in demand for renewable energy across the United States, investors can anticipate substantial returns on their investments in this newly formed entity.

Furthermore, the joint venture’s ability to deliver consistent utility bill savings reinforces its value proposition, making it an appealing partner for both customers and developers alike. The financial backing and operational capabilities of this merger could prove pivotal for its long-term success in establishing a sustainable energy ecosystem.

However, as with any merger, potential risks such as integration challenges and market fluctuations remain pertinent. A keen focus on maintaining exceptional service levels while managing operational growth will be crucial for the success of the combined venture.

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