A Solar Powerhouse

by Sean Hargadon

Aaron Hall’s home base has always been his parents’ pad. The Southern California house proved to be the perfect place to relaunch Borrego Solar Systems, now one of the hottest commercial solar energy firms in the country.

In eight years Hall has grown Borrego from a nearly defunct photovoltaic solar panel installation company into a $60 million firm, earning its CEO — who still lives at home — recognition as one of the nation’s hippest up-and-coming execs.

Aaron’s father, Jeff, says he’s not surprised at his son’s success. He’s been watching the entrepreneur emerge since Aaron was a young boy.

When his son was about 5 or 6 years old, Jeff recalls, the family had a pine tree in front of the house. “Aaron would collect pine cones and sell them to the other kids on the block for a quarter. And this was something you could pick up off the ground.”

In grade school Aaron started a candy business, selling Blow Pops — at a substantial markup — on a prepaid debit card system.

“He ran the candy business all the way through high school,” Jeff says, “but in high school he didn’t sell anymore, he had salesmen. He’d go to Costco and buy $400 worth of candy. Kids would come to the house and pick up their bags. He was like a dope dealer.

“He was always an entrepreneur.”

Hall’s days of dealing candy are long gone. Now he’s selling solar.

Hall (WCAS01), an economics major at Northwestern, enrolled in a Business Institutions Program entrepreneurship class in his final quarter. He chose to focus his final project, a venture business plan, on reviving a small solar company owned by a family friend.

Hall started doing some research, calling around to solar companies in San Diego. “Nobody was answering the phone,” he says. “I thought that means one of two things: Either there’s so much work that they can’t get to the phone, or they’re not sophisticated enough to really capture all the potential business. Either way, that’s a good sign for me.”

Hall got an A on the project and earned praise from the company’s founder, James Rickard, an astrophysicist at San Diego State University who had launched Borrego in 1980, partly to install a solar power system on his off-the-grid Borrego Springs, Calif., home. Over the years Rickard had completed projects for friends and family, but by 2001 Borrego was largely dormant, and his license was about to expire.

On the day Hall arrived at home after graduation, Rickard came calling. “Aaron just energized Jim,” his dad recalls. “They formed the corporation that day.”

Rickard taught Hall about physics, solar theory, electric technology and contractor law. They built the first system on the Hall family home.

Before long the young Hall had six or seven people coming to his father and stepmother’s house in the San Diego suburb of El Cajon for work every day. “The neighbors were not happy about 18-wheelers dropping off pallets of solar panels in the middle of the street,” he says. Initially the company installed solar panels on individual homes at an average cost of $40,000 per household. (Incentives covered up to 50 percent of the costs back then. Now those incentives are closer to 30 percent of the cost.)

By 2005 Borrego reported $7 million in revenue and nearly doubled it every year thereafter — surpassing $60 million in 2008.

In 2002 Hall hired his older brother, Mike, a chemical engineer by trade, to expand the company to Northern California, where he opened a Berkeley branch. In 2007 Borrego opened an office in Boston, and a recent $14 million venture capital investment will help drive the company’s mid-Atlantic expansion. The company, which has installed more than 1,000 photovoltaic systems, now has more than 165 employees in seven offices.

BizSanDiego named Borrego one of the city’s fastest growing businesses last April. In September Inc. magazine named Aaron, who turned 30 in February, No. 1 in its 2008 “30 Under 30” roundup, calling him “The Transformer.”

Hall has Borrego poised for continued growth, even in this recessionary economy. He stresses Borrego’s unusual financing options, such as power purchase agreements (where a solar company designs, installs and owns the system, and the occupant —often a large-scale commercial or public sector customer — only pays for the energy used), among its competitive advantages. The company, which started exclusively with residential projects, has focused increasingly on commercial and public sector contracts, emphasizing affordable housing and academic institutions, including a 1.2-megawatt solar electric system for the University of California, San Diego.

Borrego also installed rooftop panels on the Sacramento recording studio of the indie band CAKE, which recorded its sixth album, B-Sides and Rarities, powered entirely on solar energy. The company also partnered with Sharp Solar to donate solar electric systems to fire stations in the Southern California towns of Irvine, San Miguel and Poway after the wildfires of 2007.

In February Borrego sold its residential business to Vermont-based groSolar to focus on its commercial and public sector opportunities.

“Our mission is to accelerate the adoption of renewable energy,” Hall says. “Every house helps for sure. And part of the benefit of residential solar is that you can really change the paradigm of where energy comes from by having people feel and breathe and live and touch solar. That said, to really make a big difference in the percentage of energy mix that comes from renewable energy, you need to be doing many large systems.”

Hall believes it’s time for the United States to take its place as a leader in the production of renewable energy. Germany, which has the same amount of average sunshine as Alaska, is the world’s solar leader with 10 percent of its power coming from renewable energy, including a large portion from solar.

“They have created tens of thousands of jobs from this industry, and now they’re exporting that technology to the rest of the world,” Hall says. “The United States should be doing that as well.”

Hall says the solar industry finally has an ally in the White House in Barack Obama (H06), who has pledged to provide funding and resources for renewable energy. For solar advocates, the American Recovery and Reinvestment Act of 2009 was an exciting first step, providing grants of up to 30 percent of the cost of building a renewable energy facility. It also provides $5.5 billion for construction, repair or alteration of federal buildings to improve energy efficiency, which means funding for solar projects at military bases, schools, low-income housing developments and other government buildings.

According to the Solar Energy Industries Association’s US Solar Industry Year in Review, the capacity for photovoltaic solar power increased by 58 percent in 2008. “That’s really nothing compared to what’s coming down the pipe,” Hall says. “Within six to nine months we’ll see the effects of the new administration at the project level.”

Hall expects record growth and record profitability starting in 2010. “We want to be a billion-dollar company, and we don’t think it’s that difficult to achieve, considering the potential that’s out there. Solar is still less than 1 percent of the energy mix in this country, and it could easily be 10 percent in just a few years.

“We as an industry are going to grow dramatically, and Borrego is very well positioned to capture a lot of that growth.”

And if Borrego continues to grow, Hall might actually move out of his parents’ place.

“We joke about it,” says Jeff. “We kind of live with him, not the other way around.”

Tell us what you think. If you have any questions or comments, please e-mail the editors at letters@northwestern.edu.