It looks like an auspicious start to 2013 for Sungevity, the residential solar leasing company. On Jan. 16 it closed on a new $125 million fund to support growth of its solar leases throughout the U.S. and its two international markets, the Netherlands and most recently Australia.
The new round of funding includes a $40 million equity financing round led by Brightpath Capital Partners and Lowe’s, a home improvement chain. The round also attracted new equity investors including Vision Ridge Partners, Craton Equity Partners and Eastern Sun Capital Partners, LLC. The balance of the funding includes a combined $85 million Energy Capital Partners (ECP) and a commercial bank, the company didn’t name. Combined the $125 million is Sungevity’s largest round of funding to date, said spokesperson John Ordona.
“Our ability to attract substantial investment from a list of respected backers is a powerful vote of confidence in our highly scalable growth model and customer-centric approach to doing business,” said Sugevity CEO Andrew Birch. “We believe this new funding will take us into the next phase of growth.”
The company will use the funds to develop solar projects across its nine state region, which includes Arizona, California, Colorado, Connecticut, Delaware, Maryland, Massachusetts, New Jersey and New York—as well as the two international locations. In the Netherlands it holds an equity stake in Zonline a solar company, and in Australia is operating through a joint venture called Sungevity Australia. The funds could help the company expand as well. “We are considering expansion to additional domestic markets, but we are providing specifics at this time,” Ordona said.
The company announced a lot of new service territories in 2010 and 2011, but expansion slowed down in 2012 as the company focused on increasing efficiencies in its business model in 2012, the company said. Among other things it improved its Solar Social Strategy, which included partnering with companies and organizations including Lowe’s, Credo Mobile, Sierra Club and expanding its network of installer partners. The company said the partnerships and work on the social aspects of its software referral program, means that most of its referrals now come from existing customers and partners, which resulted in its ability to reduce installation costs by 30 percent in 2012.
Still, the company is raising financing from a limited number of potential partners. Last year was a big year for discussing new financing mechanisms to expand solar, like creating securities and bonds, allowing more people to invest directly in solar companies or projects. “We are actively speaking to financiers on that and other structures,” Ordona said. “There is a maturing of the asset class, which is leading us to the more mainstream financing solutions.” Once solar companies like Sungevity can tap into that it could lead to a further lowering in project costs. That could start happening in 2013.