Roof Diagnostics Solar is close to outgrowing its new corporate headquarters on Route 34 in Wall Township.
Just three years ago, the company had 20 employees.
"We have 275 employees today," said Kelcy Pegler Sr., the company's owner and president.
"You don't have the latest number," interjects his son and the company's co-founder, Kelcy Pegler Jr. "We just crossed 300."
Roof Diagnostics was founded in 1994 as a roofing company, but after the start of the recession they branched into solar, and by their second year in the solar industry had $30 million in revenue, only $1 million of which came from roofing.
"We went from being a roofing company that wanted to do solar, to a solar company that does a little bit of roofing," Pegler Sr. said.
Roof Diagnostics' story of rapid growth isn't unique in a state that until recently was America's second-largest solar market. Dozens of companies — perhaps scores — dipped their toe into solar only to be swept away in the current of a red hot market. What makes Roof Diagnostics' story unique is that they didn't enter the fray during the solar heyday. They jumped in just as the market was going bust, but have grown all the same.
"We're kind of like fish swimming against the stream," Pegler Sr. said.
New Jersey's solar market has historically been fueled by Solar Renewable Energy Certificates, or SRECs. The certificates act as credits earned by the owners of solar installations and sold on an open market to power suppliers, who by law are required to incorporate renewable energy into their portfolios.
The SREC program fueled the growth of the industry until 2011, when the supply of SRECs in the marketplace began to exceed demand. That's the same year Roof Diagnostics branched into solar. Since then, SREC prices have plummeted, selling in the low $100 range, from a height of more than $600.
Lower SREC values have made solar less lucrative for investors and commercial clients, who like to see a higher return on their investment. But Roof Diagnostics is focused squarely on residential customers. Pegler Jr. said those customers don't care so much about SREC prices — they care about their electric bills.
"Our customers are really looking to lock in rates for a 20-year period and save money on a bill (the electric bill) that's otherwise unfixable," he said.
Roof Diagnostics works with solar financing firms, including SunRun Inc., to sell residential customers solar systems using power purchase agreements, which typically last 20 years. Under those agreements, SunRun or a similar firm acts as the third-party owner of the solar system. The homeowner pays nothing upfront, just a flat monthly fee for the life of the agreement. In exchange, the third-party owner agrees to handle the installation and any maintenance, while also reaping the rewards on state and federal renewable energy incentives.
Dennis Wilson, president of the Mid-Atlantic Solar Energy Industries Association, said such agreements make sales less dependent on SREC prices.
"When a customer doesn't have to lay out any dollars themselves to have a solar system put on their roof, even if their savings is now less than it was before when SREC prices were higher, it certainly still makes it relatively easy to go forward with that decision."
The savings can vary significantly from house to house, but the Peglers say the numbers almost always make a strong case for rooftop solar.
Maribeth Woodford put solar panels on her three-bedroom home in Brielle two years ago. Before going solar, her summer electric bills peaked at around $300. Now, her home runs on 100 percent solar energy, and she pays only a $75 monthly fee.
"It's great," she said. "It's really great in the summer. I used to cringe opening the (electric) bill."
Woodford's solar installation is small, but Roof Diagnostics is focused more on volume than on size. The company installs about 125 systems each month in New Jersey, and another 25 in its other states, New York, Massachusetts and Connecticut.
"What we realized was the economies of scale that were available for us were really valuable," Pegler Jr. said. "So as the economies of scale presented themselves, we captured every one of them we could."
Thus, as they expand out of state, their paperwork, design and other functions can be centralized at their new, growing Wall headquarters. The company has also signed a deal with Home Depot to put kiosks in 102 stores in the mid-Atlantic. Those kiosks are generating sales leads and helping prequalify customers.
Roof Diagnostics, meanwhile, continues to target expansion opportunities. While the headquarters remains in New Jersey, the company expects to hire some 150 this year, mostly for sales and installation posts out of state.
In an interview last week, the elder Pegler said he's the more cautious member of the father-son duo, his son being more prone to "wild ambition."
Still, when talking about the untapped solar markets seemingly open for the taking, even Pegler Sr. can't help but see clear skies.
"I do not see any let-up on this," he said.
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