RGS Energy realigned its operations to best serve the company’s customers, including traditional solar and Powerhouse in-roof shingle customers.
Powerhouse 3.0 is a next-generation solar shingle system using technology developed by The Dow Chemical Company. The revolutionary roofing product combines the protection of a conventional asphalt roof with an integrated photovoltaic (PV) system that provides power to the home.
Powerhouse is designed for homeowners looking to replace their roofs, whether because of age or damage. It is also an ideal solution for newly constructed homes that must meet certain efficiency standards, such as California’s 2017 Title 24 regulations. RGS estimates the addressable market for its product in the US alone is approximately 7 million homes each year.
“Since securing our exclusive worldwide license for Powerhouse last October, our belief in the size of the market opportunity and potential for substantially growing shareholder value has strengthened,” said RGS Energy CEO, Dennis Lacey. “Over the last six months, we have secured relationships with supply chain partners, engaged with professional roofing contractors, commenced the UL certification process, and initiated our marketing plan. Now more than ever, we believe Powerhouse represents a major game-changer for RGS, and the time has come to realign our organization and focus on this opportunity.”
In the same way RGS spearheaded the emergence of the solar industry in the late 1970s, RGS plans to lead again with Powerhouse. The realignment is a timely strategic shift in the company’s primary focus from traditional residential solar — an increasingly commoditized and competitive business — to a new emerging market with Powerhouse, a unique, value-add solar solution. RGS will continue to serve its traditional solar markets.
The strategic realignment has scaled back the company’s residential solar homeowner business. While RGS has made progress in growing solar sales and backlog, growth has not met initial company expectations. The realignment reduced the number of outside sales personnel. RGS plans to maintain the areas of core competencies meeting expectations, such as its e-sales call center and commercial sales organization.
“For us, Powerhouse not only represents a significant change in product mix, but also how we go to market,” said Lacey. “We can now leverage more cost effective and operationally efficient business-to-business sales channels. Further, with its advanced, patented intellectual property and lower manufacturing costs than prior generations, Powerhouse 3.0 will be a major market differentiator for RGS, creating favorable high competitive barriers to entry that we’ve never enjoyed with our traditional solar business.”
According to Alan Fine, RGS Energy’s chief financial officer and treasurer: “As we advance toward the UL certification of Powerhouse 3.0 and initial sales, we believe this realignment of the Residential and Sunetric operations will reduce cash spend, which we estimate to be a 30% reduction in operating costs below the gross profit line. This will allow us to allocate more financial and human resources towards the launch of Powerhouse.”
The company does not believe the costs to implement the operational realignment will be material to its operations or financial condition.