John Schaeffer was living in an off-the-grid commune in California in 1978 when he met a fellow in a Porsche who had some aerospace-industry solar panels for sale. Schaeffer bought them and hooked them up to a TV at the commune so everyone could watch “Saturday Night Live.”
“Then we bought a hundred and sold them,” the 64-year-old Schaeffer said. “Then we bought a thousand and sold them, and we were in the solar business.”Real Goods Solar — the company born out of the back seat of that sports car — now is the largest solar industry company in Colorado and one of the biggest in the country. The solar installer employs 170 people in Colorado, most of them in sales and engineering at its Louisville headquarters, and 500 people elsewhere in the nation.
But while Real Goods, renamed RGS Energy in January, may have been the first in the solar-sales game, it was overtaken by new and better-financed competitors and ran into trouble around 2010.
“In the last four or five years, the industry evolved, and we didn’t,” said Kam Mofid, who took over as chief executive in July 2012.
New challengers, such as San Mateo, Calif.-based SolarCity, grew rapidly, and investors, including JPMorgan Chase, Goldman Sachs and Bank of America, pumped more than $2 billion into the fast-growing rooftop-solar market.
By November 2012, RGS stock had slipped to an all-time low of 40 cents a share, and the company had posted losses in three of four years.
In the past 14 months, however, RGS has come roaring back — with $35 million in acquisitions, a new strategy and near quadrupling in share price to $3.81 on the Nasdaq on Friday.
“I see more tail winds than head winds now,” Mofid said.
Still, the company posted a 2013 loss — estimated by financial analysts in the range of $8 million to $10 million.
“We are still on the wrong side of the fence,” Mofid said.
RGS is also buoyed by a growing market and the fact that, despite its troubles, it is one of a handful of solar installers with a national presence, industry analysts say.
A dramatic drop in the cost of solar panels is also aiding the industry.
While Schaeffer paid $100 a watt for the panels he bought in 1978, the 2014 cost is projected to be 20 cents a watt. The average home-solar installation in Colorado is about 5,500 watts.
As a result, the home-solar installation market is projected to grow 25 percent in 2014 to 1 gigawatt of panels, according to the market analysis group GTM Research.
“The market is fragmented, and there are only a handful of companies that are in a lot of places, Real Good is one of them,” GTM solar analyst Nicole Litvak said.
In 2012, RGS and four other companies, did about a third of all the residential solar installations in the U.S.
With 17 offices around the country, RGS built solar installation in 30 states and has almost 20,000 customers — some with long-term leases and some who bought the systems from the company.
California is RGS’s biggest market, with 7,400 customers. Colorado is second, with 1,200, and there are about 2,200 customers in seven northeastern states, according to company data.
Still, by the third quarter of 2013, SolarCity alone had a third of the market. RGS remained in the top five.
“There is no question it is a competitive market,” said Rob Stone, a financial analyst at Boston-based Cowen Co. “But there are so many small companies, there a is good chance for consolidation, and that is Real Goods Solar’s opportunity.”
The company must grow its sales volume, particularly for bigger commercial solar arrays, Stone said.
RGS fell behind in market as competitors, such as SolarCity, became more adept selling solar systems door-to-door and to retailers such as Home Depot and when others, including Sungevity, started selling online.
“We used to be the 800-pound gorilla, but because of a lack of forward thinking, we missed an opportunity,” he said.
Last August, RGS acquired Denver-based Syndicated Solar for $3.5 million and Port Chester, N.Y.-based Mercury Energy for $35 million, according to Bloomberg data.
Syndicated Solar was bought for its sales-savvy software, and Mercury was purchased to help bolster RGS’s presence in the Northeast, Mofid said.
This year, RGS struck deals with Massachusetts and Vermont solar developers and financiers for commercial, school and solar-garden projects in those states.
Last month, RGS formed a joint venture with Connecticut-based Altus Power American Management to finance and develop up to $150 million in commercial projects. The company also filed a notice with federal regulators that it may seek to raise up to $200 million in stock or debt offerings for future projects.
Trying to improve its own sales, acquiring companies, and striking deals and joint ventures are what RGS must do to grow, Stone said.
Mofid said the emphasis on the Northeast speaks to where there is market growth.
With the uncertainty around solar incentives under Xcel Energy’s Solar Rewards program, Mofid said, “the solar market in Colorado has really slowed down.”
RGS founder Schaeffer still manages retail sales for the company and says he is bemused and heartened by the transformation of solar from counterculture to mainstream.
Companies from Aetna Insurance to Timex have added panels to their offices, developers are putting solar panels on new suburban homes as a selling point, and international banks are investing billions of dollars in the sector.
“I could see it was going to be really big,” he said, “though I didn’t envision Goldman Sachs being part of it.”
Solar is no longer a “feel-good environmental sale,” Schaeffer said. “It is an economic sale, because solar saves money.”
And the original solar promise of clean, off-the-grid energy remains, he said.
“It isn’t going to happen with a few outlaws and misfits in the woods,” Schaeffer said. “To save the planet, it needs mass adoption.”
Mark Jaffe: 303-954-1912, firstname.lastname@example.org or twitter.com/bymarkjaffe