Sungevity, the solar financing and solar software startup, just announced $125 million in new venture capital and project financing.
It's another sign that investors still see value in the downstream solar market. SolarCity (SCTY), recently public, is trading at $13.72 per share. The optimism embedded in SolarCity's stock performance likely helps companies like Sungevity or Clean Power Finance.
Sungevity gained $40 million in equity in 2012 led by "impact investment fund" Brightpath Capital Partners and home improvement store Lowe's, along with Vision Ridge Partners, Craton Equity Partners and Eastern Sun Capital Partners. Energy Capital Partners (ECP) and an unnamed bank committed $85 million in new project financing.
The ECP funding came from "ECP's energy-focused mezzanine investment activities," according to a release.
Sungevity's goal is to lower the cost of solar customer acquisition, reduce installation costs (which it cut by 30 percent in 2012), and deliver a firm project quote within twenty-four hours of inquiry without a visit to the home.
According to GTM Research, in the first half of 2012, Sungevity had a 3.1 percent U.S. residential installer market share -- compared to SolarCity at 13.3 percent. Sungevity financed the installation of panels from Suntech (42 percent), Schuco (29 percent), BP Solar, and Sharp in the first half of last year.
Sungevity, along with newly public SolarCity, as well as SunEdison, Sunrun, Vivint, CPF, OneRoof, BrightGrid Solar, and a few others have spearheaded the third-party ownership model. The third-party solar financing sector has won and deployed billions of dollars in structured financing to date.
Home and business owners can contract with a third party like Sungevity for electricity generated by a solar system installed, owned and maintained by the third party. The investor gets the 30 percent federal Investment Tax Credit (ITC) and the installer gets regular payments over the contract’s term. The resident gets solar-generated electricity at a rate significantly below the retail utility rate without bearing the burdens of upfront costs and ownership risks.
Third-party financing of solar, be it some form of lease or power purchase agreement (PPA), has become the leading method by which homeowners can afford to install solar.
Sungevity notes that the firm has doubled the number of annual installations every year since its founding.