Residential third-party ownership (TPO) is among the hottest segments of the solar industry and companies like Sunrun are leading that charge. Sunrun just raised $60 million in equity financing to help the company scale up as it works to meet the demand for its growing customer base.
The latest round of funding won’t directly support more solar photovoltaic rooftops installed through SunRun’s solar power service, which offers homeowners a PV array at no upfront costs. “On the venture capital side of things our new total (with this round) is $145 million,” said Sunrun spokesperson Susan Wise. “To date Sunrun has attracted enough capital to support the purchase of over $1 billion in solar systems.”
The latest round of funding was led by Madrone Capital Partners, which has ties to Wal-Mart heirs, and included investments by Accel Partners, Sequoia Capital and Foundation Capital, Sunrun said. The investors said they made the investment because they approved of the company’s management team, and its plans for scaling up its business model.
“Equity financing isn't something that happens on a really frequent basis. Our more frequent transactions are the ones that support the purchase of systems—project financing,” Wise said.
The company more commonly raises tax-equity funds to support purchasing and installing more photovoltaic systems. “In April we announced our latest tax equity project financing transaction with U.S. Bank,” Wise said. That was a $150 million fund.
Sunrun said it is the largest residential TPO company in the country. “Sunrun has over 20,000 residential customers,” Wise said. One of its competitors, SolarCity, may be bigger, but it does both residential and commercial. “So when you are looking at metrics and comparing you'd need to segment out residential,” she said.
Residential TPO companies that offer solar leases like Sunrun, SolarCity, Sungevity and Clean Power Finance are taking one more and more markets. “The real challenge is inertia and education—getting more people to realize this option is available,” Wise said.
However, in states where TPOs are offered, they’re quickly becoming the drivers for residential adoption of PV. “To date in 2012 solar power service share of the Massachusetts market is over 80 percent. Also, over the past 12 months, market share for solar power service climbed steadily in California and reached about 75 percent of the home solar market in February 2012,” Wise said, citing a recent report from PV Solar Report. She added that one-third of all Californians and nearly half of all Massachusetts homeowners going solar choose Sunrun.