The last few months have seen growing momentum in solar financing. There seems to be a new, significant funding event every week.
The residential solar installation and finance market is remaking itself through new alliances, vertical integration and hybrid sales channels; access to increasingly cheaper capital is helping too -- whether it be through securitization or other means. We are in a post-CSI era and yet installation prices continue to fall.
The early winners in this high-growth and volatile market have emerged. But the landscape is still shifting.
We're continuing to keep tabs on the most important financing news in the sector.
Solar financier Sunrun just announced that it closed $150 million in equity financing. The company claims that investment was "the largest private equity raise announced to date for a private residential solar company in the U.S." An unnamed leading public institutional investor led the round with $100 million. Existing investors including Foundation Capital, Accel Partners, Sequoia Capital and Madrone Capital, as well as several new investors, provided the remaining $50 million.
There is a steady flow of rumors that identify Sunrun as an IPO aspirant.
Residential solar news roundup
Clean Power Finance, which provides financial services and software to the residential solar market, just announced that Credit Suisse has committed capital as the lead investor in a $200 million fund to finance residential solar projects through CPF’s platform. CPF CEO Nat Kreamer notes, “The fact that we’ve raised more than $1 billion of residential solar financing from diverse project investors demonstrates both the vibrancy of the industry and investor confidence in the CPF network.”
CPF, backed by KP, has raised $90 million in venture capital and equity from investors that include Edison International, Duke Energy, Google Ventures, Kleiner Perkins Caufield & Byers, Hennessey Capital, Claremont Creek Ventures and Sand Hill Angels.
According to sources close to the firm, SolarCity, the leading residential solar installer and financier, will soon be unveiling a loan product. Word has it that the program will be open to applicants with FICO scores of 650 and higher and offers a 30-year option. Another source noted that the loan program will be tested in a limited market to begin with, in order to better understand and codify the sales process. SolarCity did not have an official comment. A loan product will allow the firm to turn away fewer applicants while still offering the "SolarCity experience."
Other recent residential solar finance news:
SunPower just closed $42 million in non-recourse debt and now has added Google as a partner in a $250 million program to finance residential solar rooftops. Google committed up to $100 million, and SunPower is committing approximately $150 million. This is Google's sixteenth renewable energy investment and its third residential rooftop solar investment. Google has invested a total of more than $1 billion in 2 gigawatts of renewable energy projects across the globe.
Investment firm Baird views the tax equity partnership with Google as a positive sign that demonstrates "increased investment by entities outside of traditional tax-equity investors."
SunEdison closed the "first $150 million of a $300 million three-year project finance revolving credit facility arranged by Deutsche Bank Securities," according to a release. The debt is intended "to support the development and acquisition of new projects in the United States and Canada." SunEdison claims to have used a total of $1.2 billion from an earlier credit facility to finance 325 megawatts of solar projects.
Sungevity raised a $70 million funding round led by Jetstream Ventures, along with investment from utility E.ON and GE Ventures. The online solar sales company has now raised more than $200 million in VC and project financing from investors including Brightpath Capital Partners, home improvement store Lowe's, Vision Ridge Partners, Oaklandimpact, Greener Capital, Firelake Capital, Craton Equity Partners and Eastern Sun Capital Partners.
Sungevity claims it can now deliver a firm price quote for residential solar rooftop systems instantly, without a home visit.
Joel Dobberpuhl, CEO of Jetstream Capital (the parent company of family office Jetstream Ventures), said in a company release that Sungevity’s "capital-light business model makes it an exceptional choice for our first private-market investment in downstream solar." Dobberpuhl is also a co-owner of NHL hockey team the Nashville Predators.
According to a release, Sungevity's sales in the U.S. doubled in 2013. Sungevity is looking to further fund its expansion into Europe.
Last week, we reported that Sunrun and Sungevity had formed a partnership to enroll at least 10,000 new residential solar customers. Under the non-exclusive agreement, Oakland’s Sungevity will acquire customers, while Sunrun will finance the rooftop installation and own the PV system.
Sungevity is going with a pure-play customer acquisition strategy in a market that seems to be moving toward vertical integration.
SunPower closed $42 million in non-recourse debt to finance its residential solar lease program. (Residential mortgage loans in the U.S. also use this type of debt.)
Hannon Armstrong Sustainable Infrastructure (HASI) Capital furnished the debt. SunPower's residential solar lease program has won more than 20,000 customers in the U.S., according to the firm.
SunPower's CFO Chuck Boynton said in a release, "Among our portfolio of financing options, the solar lease remains one of the more popular choices by consumers." HASI CEO Jeffrey Eckel said, "With this investment, we are further diversifying our portfolio of economic, reliable and sustainable distributed energy assets, targeting assets that can produce sustainable yield."
Hannon Armstrong is classified as a real estate investment trust (or REIT) and makes debt and equity investments in sustainable infrastructure projects.
The yield for SolarCity's $72 million asset-backed securitization recently priced at 4.59 percent. According to Roth Capital Partners, the "deal was oversubscribed." Roth suggested that the next deal "may be larger and include tax equity. Consequently, we view this as an incremental step toward lower-cost financing." Roth added that by continuing to adjust "important variables, such as the advance rate, maturity, and underlying asset profiles, we believe SCTY is attempting to gain an understanding of demand for its ABS product."
Deutsche Bank's Vishal Shah writes, "We believe investors are largely discounting the potential upside resulting from lower financing costs, grid parity beyond 2016, improving technology costs and potential scale benefits driving share gains over time."
Solar Universe, which focuses on franchising solar installation, announced a partnership with GHS Interactive Security, a security and home automation firm serving customers in California. Solar Universe has 37 locations in the U.S.
This slide from a presentation given by GTM Research VP Shayle Kann at last week's Solar Summit shows the downward trend in solar installation costs, as well as the 1.9 gigawatts of distributed solar installed in 2013. Read more on Kann's presentation here.