California solar installer raises $15 million to expand to the East Coast
During a withering recession, one would think the residential solar business would suffer. After all, five-figure photovoltaic panel arrays would seem to be one of those household improvements that would be first to fall off the to-do list.
Yet on Wednesday, Sungevity, an Oakland, Calif., solar installer, announced that it had raised a $15 million round of funding to further finance the three-year-old startupâ€™sÂ breakneck growth. Including the $15 million, the company has raised a total of $25 million from Greener Capital, Firelake Capital, BrightPath Capital Partners and individual investors such as the actress Cate Blanchett.
Sungevity says that in 2010 its share of the California residential solar market has grown from 0.4 percent to 2.9 percent. The companyâ€™s innovation has been to use imaging technology and proprietary software to remotely size and design rooftop arrays, allowing customers to order their solar systems online. That cuts out multiple visits to a home by salespeople and installers.
But whatâ€™s really driving Sungevityâ€™s growth, and that of competitors like SolarCity and SunRun, is a financial innovation.
Earlier this year, US Bank created a $24 million tax equity fund for Sungevity to finance solar leases. That lets homeowners obtain a solar array for no money down and a monthly payment that can be offset by the savings on their electricity bill. For its part, US Bank gets to take a 30 percent federal investment tax credit on the installations.
Danny Kennedy, Sungevityâ€™s co-founder and president, said that the company had signed one megawattâ€™s worth of solar leases in October alone and connected solar arrays generating 500 kilowatts of electricity to the power grid.
â€śIt depends on the month and geography, but broadly 95 percentâ€ť of sales are leases, Kennedy, a former Greenpeace activist, Â said in an e-mail.
He said Sungevity, which currently operates in Arizona, California and Colorado, will use the latest round of funding to expand to the East Coast.
â€śWeâ€™re targeting a cluster of six states in the Northeast,” Kennedy said. “The likely suspects include New Jersey, Massachusetts and Pennsylvania.”
Those states offer varying incentives for homeowners to install solar arrays, with New Jersey offering some of the nation’s most generous subsidies.
The company also will be seeking an additional tax equity investment to fund additional solar leases for customers, according to Kennedy.
Sungevityâ€™s investors seemed pleased by the startupâ€™s performance. When I ran into Charlie Finnie, the managing partner of Greener Capital, at an event at Sungevityâ€™s offices in September he was all smiles when he mentioned the companyâ€™s burgeoning revenues.
â€śThis is a winner,â€ť he said.