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NC Solar Firm Gets $30M Investment

10:34 AM, Jan 29, 2014   |    comments
FLS Energy President Dale Freudenberger said the company hopes to grow with an infusion of $30 million. / Bill Sanders /wsanders@citizen-times.com
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ASHEVILLE, N.C. (ACT) -- FLS Energy, the homegrown solar power company ranked as one of the nation's fastest growing firms, looks to add jobs locally while spreading nationwide with a $30 million infusion by a group of private investors.

FLS Energy will close this week on a deal reached after nine months of negotiation with Capricorn Investment Group, New Energy Capital, Novus Energy Partners and Vision Ridge Partners.

The partners will initially invest $18 million, allowing FLS to build more solar photo voltaic farms, buy existing solar projects and acquire other businesses in the field. The second round of funding will be available next year.

"With our new partners, and the infusion of new working capital, we will be in a great position to expand our solar asset base as well as opening the door for potential solar developer acquisitions," said Dale Freudenberger, the new CEO of FLS Energy.

With the new investment, FLS will start hiring again, looking for project managers, financial, legal and administrative professionals to oversee solar farm design, installations and operations.

Freudenberger, Hardy LeGwin and Michael Shore launched FLS Energy in 2006 in Black Mountain, lining up their initials of their last names to christen their new venture. In the beginning, the trio of entrepreneurs focused on solar thermal systems to heat water for households, hotels and other businesses.

Their projects included a solar thermal system for the Hilton Asheville Biltmore Park and a solar photo voltaic array generating electricity on the old Haywood County landfill near Canton, but their reach expanded statewide and across the Southeast. FLS recently completed solar thermal installations on 2,000 homes for Marines living at Camp Lejeune.

Over time, FLS shifted focus from an installation company to a professional contracting firm, designing and financing large solar farms to generate electricity to sell to utilities.

Brownie Newman, a former Asheville City councilman and now Buncombe County commissioner, joined the company in 2008 as vice president of business development. "It's been exciting to be a part of an industry and a business going through such dramatic growth. Solar has become a mainstream energy source faster than even we thought it would."

FLS Energy has seen revenues grow from $8.1 million in 2009 to $42 million in 2012 to $78 million last year For two years running, FLS ranked as the state's fastest-growing company on Inc. magazine's list of the nation's top 500 companies.

North Carolina vaulted from fifth in the nation to second in 2013 for solar photo voltaic installations, adding 400 megawatts of electricity last year.

FLS has been adding to that tally, building large arrays outside the steep terrain of Western North Carolina, looking to large agricultural tracts toward the Tar Heel coast. Most recently, the company completed a large 25 megawatt project near King's Mountain - the Battleground Solar Farm that boasts more than 14,000 solar panels on 18.5 acres.

Electricity generated by the sun will be sold to Duke Progress Energy for distribution on the grid to power area homes, offices and buildings.

The private equity investment comes as the solar industry continues to grow nationwide. Solar installations reached a record 4.2 gigawatts during 2013, according to the industry tracker NPD Solarbuzz. Since 2012, the U.S. market has grown 15 percent. Those arrays not only generate electricity but more jobs.

The U.S. solar industry employed 142,000 workers in 2013, up 20 percent over the previous year, compared to only about 2 percent average growth in all sectors.

FLS's explosive growth came with debt, and 2013 had a rocky start with slowing revenues, Freudenberger said. After growing to around 65 employees, the company has scaled back with attrition and layoffs. FLS now has 43 employees, most of them based at the company headquarters on Roberts Street in the River Arts District. FLS has also opened an office in Charlotte with two workers.

In September, Shore left the company. Freudenberger assumed the role of CEO. LeGwin remains on the board of the privately held company.

New Energy Capital, based in Hanover, N.H., has been a financial partner of FLS for the past three and half years, putting $12 million into FLS projects in September 2011. The investment group most recently competed a deal to invest $67.3 million in solar farms in California.

Capricorn, based in Palo Alto, Calif., and New York, has about $5 billion in capital, investing in solar assets in India to a solar cell company in California. Novus Energy Partners is based in Alexandria, Va. Vision Ridge Partners is headquartered in Boulder, Colo., looks for sustainable companies in the clean tech sector.

"Now instead of just one deep pocket, we have four deep pockets we can go back to," Freudenberger said. The equity investment will be for the long term and not a quick five-year exit plan. "We plan to remain headquartered in Asheville no matter how we grow over the next five years. We will be a more sustainable, stable company, no matter what the ups and downs are in the market.

"To create a company that would grow to close to $80 million in revenue, it's a pretty good accomplishment for three friends from Asheville," Freudenberger said.

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