Layoffs at REC Solar and Spruce underline market changes

Normally when pv magazine reports on employment in the solar industry, the news is highly positive: documenting the ongoing growth of solar jobs, or at best the difference between various estimates of how many hundreds of thousands of workers are now employed in solar.

However, this week has been different. After we broke the story of Sungevity’s bankruptcy, former employees and those with inside knowledge have repeatedly contacted us about layoffs that occurred over the last month. On the surface, this paints a troubling picture of the solar business climate in early 2017, particularly in California.

Yesterday pv magazine discovered staff reductions at both REC Solar and Spruce Finance. Inside sources report that California’s REC Solar laid off 35 workers on February 16, and an unknown number of workers were laid off without notice from Spruce Finance’s San Francisco office on February 17.

Source from inside Spruce Finance report that the reduction in force spanned the company, from executives on down, including nearly half of the marketing department. These sources report that Spruce may have missed a large equity raise that they was expected, and that this has interrupted the company’s plans. They also report that some staff who were notified will officially end their service in coming weeks.

Unlike workers at Sungevity, Spruce Finance reports that the employees it let go were given severance packages regardless of tenure, as well as accrued paid time off. pv magazine has found no record that the layoffs at Spruce or at REC Solar were ever reported in the press.

The layoffs at the two companies adds to those at Sungevity, which terminated an estimated 400 workers last week. The companies letting workers go span market sectors, with Sungevity and Spruce Finance working primarily in the residential sector, and REC Solar in commercial and industrial as well as utility-scale solar.

Statements from both Spruce Finance and REC Solar refer to internal changes within their businesses and not specific larger market conditions. However, as we reported yesterday, there has definitely been a slowdown in the residential solar sector in California, which remains the largest national market.

And while there are still a lot of big projects underway, the utility-scale sector is expected to experience something of a hangover after the massive build-out in 2016, when more than 10 GW of large-scale solar was installed.

The problem may be more the margins at which projects are being built instead of the volume. The record-low electricity contracts being reported for large projects leave little fat, and price competition has been fierce other sectors as well.

“Some people confuse employment with profitability,” Spruce Finance CEO Nat Kreamer told pv magazine. “For example, we’ve seen record job creation in solar, but not enough profit creation.”

And while Sungevity is enduring a rather messy bankruptcy, both REC Solar and Spruce Finance express optimism over the future. Spruce notes that its channel-business approach enables smaller installers to compete with larger companies, and its comments echo national data which shows that the number of new businesses in the market is growing.

“We are benefiting from the increasing number of small- and medium-sized businesses in the residential solar industry,” notes CEO Kreamer.

Meanwhile, REC points to its relationship with electric industry giant Duke Energy as a reason for its optimism.

“We are expanding our focus on enterprise customers and utility-scale projects, while maintaining focus on core C&I markets, all where the REC Solar/Duke Energy value proposition resonates particularly well,” REC Solar Senior VP of Marketing Allan Russo told pv magazine. “We are in a strong position to grow and expand our presence in the commercial solar market, and we remain committed to our customers and potential customers in the sector.”

 

Update: This article was updated with additional information on the layoffs at Spruce Finance on March 16 at 12:20 PM EST, after such information became available.

Correction: This article was corrected at 2:10 PM EST on March 16. The article previously stated that layoffs at Spruce were ongoing, however further discussions with both Spruce and our sources indicate that some staff have later departure dates, but that all were given notice at the same time.