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The Lens: Sparkfund acquires EPX Group

Let's talk about Sparkfund's acquisition of EPX Group. This acquisition has not been previously publicly announced, meaning this is BREAKING NEWS brought to you by Nexus Labs! This post covers the what, why, and context behind it.

Hey friends,

Welcome to The Lens, a monthly-ish recurring series where I unpack the strategy and context behind the news. (Normally, these deep dives are exclusive to members of Nexus Pro. Enjoy!)

For Volume 10, let's talk about Sparkfund's acquisition of EPX Group. This acquisition has not been previously publicly announced, meaning this is BREAKING NEWS brought to you by Nexus Labs! How exciting…

Volume 10 post brings together our recent coverage of M&A activity in decarbonization software and continues our series on the growth and importance of platform business models in the digitization and decarbonization of the buildings industry.


What happened?

Sparkfund acquired San Diego based EPX Group in December 2021.

Sparkfund is a 125 person company based in Washington, DC. They’re what I call a program management platform. As discussed in The Lens, Volume 5, these firms use technology to streamline the engineering, design, funding, installation, management, and maintenance of energy efficiency and decarbonization retrofits. “Platform” is a key word which we’ll explore below.

EPX Group is a solar, battery and back-up generation implementer with offices in Temecula, California and Georgetown, TX, with a team of about 50 employees at the time of acquisition.


We need to retrofit almost all buildings to put them on the path to zero operational carbon. That means installing trillions, or at least hundreds of billions, of dollars of equipment in the next decade or so.

Currently, our industry is not retrofitting buildings fast enough. As discussed with RMI’s Cara Carmichael on the Nexus podcast, we need to be retrofitting 4% of buildings per year. We’re doing far less than 1% today.

Physical implementation is a huge piece of that puzzle. In other words, we can’t solve the energy transition with software and financial innovation alone—someone must get up on rooftops and into dusty crawl spaces to put the steel and wires and controllers in place.

Historically, physical implementation has been overly complex. Customers have been forced to navigate fragmented, inefficient value chains and separately find many required services to procure, upgrade, and maintain their energy systems—from financing companies to local implementation to project design and engineering. For portfolios, it’s also hard to scale projects across many facilities when each site has its own relationships with local service providers.

This has created a bad customer experience, high costs (via lots of margin stacking), and a high level of friction to get work done. As a result, building owners make the rational decision to run units to failure—keeping old, poorly maintained and inefficient units in service and contributing to the sub-1% transition rate.

As we covered in our 2021 white paper, customers (especially those with smaller buildings) require a solution that reduces the complexity, fragmentation, and cost of buying retrofits so they can focus on their core operations and business activities.

As I said in The Lens Volume 5, program management platforms like Sparkfund are designed to do just that. These firms are:

“​...digitizing more and more of the steps (of the energy/carbon management process) and engaging more and more stakeholders. They’re also solving real problems for each stakeholder in the process and letting them interact around the decarbonization project.”
“For the building owner, they’re simplifying the process and reducing risk and removing upfront costs. For the lenders, they're aggregating and de-risking smaller deals. For the supply chain, they’re reducing customer acquisition cost (CAC). For the utility, they’re providing new capabilities and value streams for customers.”

To Sparkfund, that means the integration of the following capabilities into one holistic offering:

  • Efficiency, resilience and electrification retrofit services
  • Financing options that enable customers to buy the technologies and outcomes they need, and pay for it in a way that fits their business model, (i.e. as-a-service)
  • Unlocking the value of grid service revenue (e.g. Demand Response participation) to reduce the cost of their projects
  • Digitize and aggregate project-related data to help lower the friction of assessing and approving needed work and actively manage and report on asset performance

The Sparkfund platform integrates a network of national and regional subcontractors. With the acquisition of EPX Group, Sparkfund is taking that integration one step further. Instead of subcontracting the physical implementation, they’re vertically integrating for some projects in some regions, increasing the margin they control for the express purpose of lowering the final cost to the customer. We’ll explore this more below.

EPX Group, in turn, might see less margin on individual projects but benefits from the acquisition through an increase in available capital for growth and expansion, plus access to project opportunities from Sparkfund’s other programs. They hope this will accelerate growth beyond their own normal business development and current geographical reach.

Being a part of Sparkfund’s platform also reduces the risks inherent to an implementer’s business. To implementers like EPX, fully utilizing hired crews and equipment is often the greatest challenge. Becoming part of a platform with multiple sources of project work can help smooth out that risk and improve overall profitability.


I promised we would return to the word “platform”. In order to accelerate the decarbonization of buildings, we need to reduce friction, fragmentation, and cost—and that’s exactly what creates such a big opportunity for platform businesses in the buildings industry.

The trend to reduce fragmentation through consolidation of traditional products & services in this space was already clear (see our Volumes on Measurbl + Hatch, Arcadia + Urjanet), but I think the next step needed in our industry is the creation of true platforms.

As I wrote in Platform Police, when I say “platform” I mean “a tech-driven business model that creates more economic value, provides a more efficient way of doing business, removes more friction in people's lives, and is more difficult to compete with than the old way of doing business.”

Platforms are the first business models that can keep lowering customer cost while increasing profitability simultaneously. That’s what makes dominant platforms like Amazon, Salesforce, and others so hard to compete with in their respective segments.

And that’s what excites me about Sparkfund’s strategy. While they and others in the program management platform space have lots more to build, their strategy is to become the first true platform in this space. Here’s how they’re planning to do it…

When Pier LaFarge, Sparkfund’s CEO, talks about it in this context, he describes it as:

“bringing together capabilities across multiple technologies, services and geographies in a way that is greater than the sum of the parts, that benefits from bundling, network effects, and a marketplace in a way that can drive down cost for the customer while improving consistency of value and quality.”

Let’s unpack the three most important terms in there: bundling, network effects, and a marketplace. These interconnected concepts separate true platforms from traditional products.

On a given retrofit project, Sparkfund bundles a range of previously fragmented value streams: the project management, the financing, the grid services, the digital infrastructure, and (now, with this acquisition) the physical implementation. With bundling, platforms have the economic ability to charge less, often disruptively so, for each activity, while preserving overall profitability and benefiting from a diversity in the ways they earn revenue. This means they can provide a more differentiated product while simultaneously lowering customer cost and generating substantial, often recurring, revenue and margin.

Similarly, every dollar they capture in any area of the platform adds to the scale and procurement power of the platform as a whole, increasing competitiveness and making it harder and harder to NOT use a platform to deliver a given project opportunity. As just one example, if Sparkfund is buying EV chargers at scale, they can get better prices for each customer, even if each customer is only buying a few. Those are the network effects.

Finally, the marketplace. Sparkfund brings together an ecosystem of vendors and service providers that can implement projects. In doing so, they perform a valuable turnkey service for each of their building owner customers: sourcing legitimate vendors, setting the rules of engagement, and combining point solutions into an integrated whole.

Importantly for Sparkfund, customers benefit from all the expertise of everyone in the marketplace without the platform needing to build it all in house. According to Pier (Sparkfund’s CEO), their position enables them to expand customer value in different ways:  

“Whenever it makes sense from a differentiation or profitability standpoint, our Platform can either buy (vertical integration), build (feature/capability development) or access (integrate a point-solution as a plug-in)”.

To bring this back to EPX Group, vertical integration on an energy retrofit improves Sparkfund’s total margin on the upfront installation and ongoing maintenance.¹ The more margin a true platform controls, the greater the opportunity for bundling to lower customer cost while keeping the platform business profitable overall. This is one key reason platforms become so hard to compete with over time.

Platform businesses are great at pulling capabilities from the existing set of market offerings and wrapping them together into a single offer, blended with their own in-house offerings. That includes emerging capabilities that are new to traditional energy retrofit services.

The list of needed new capabilities includes as-a-service financing offers that can guarantee savings or other attributes of installed equipment. For example, Sparkfund offers guarantees of function, system uptime and carbon reduction, while others focus more on savings guarantees in an evolution of traditional performance contracting.

A second area of capability evolution is in grid connectivity: finding new ways to capture revenue from services like demand response, peak shaving and other grid programs. Solutions like David Energy, Voltus, C-Power, Leap and more are big parts of this trend, and of course those capabilities can be accessed either directly or through the program management platforms.

Final piece of context: for large incumbents intent on selling energy and decarbonization projects to their customers (think utilities, tech companies, ESCOs, and more), Sparkfund’s Platform can be like a super subcontractor. They can offer these emerging differentiators, plus the ability to get projects done with less friction and lower cost, while sitting underneath larger business development focused incumbents like ESCOs, utilities, and energy majors.

👋 That’s all for The Lens this month!

If you want more on this topic, Joe Aamidor, Jeanne Casey, and I will discuss our thoughts on this and more in the next edition of M&A Roundup on the Nexus podcast—our ongoing series on mergers and acquisitions in our industry. To catch up on past episodes, catch the first volume here and second volume here.

Thanks for reading,


P.S. This is a special edition of the The Lens because it's available to all for free. To get access to all past and future editions plus many more benefits, join the Nexus Pro community. Then check out Vol. 1, Vol. 2, Vol. 3, Vol. 4, Vol. 5, Vol. 6, Vol. 7, Vol. 8, and Vol. 9.


¹ Sparkfund has a clear policy of neutrality when it comes to sending projects to implementers under its programs, even their own subsidiaries. This tracks to the policies of platform businesses in other sectors, putting lowering customer cost and improving overall competitiveness of offered services as the prioritized goal.