$85m in project finance for Sungevity

US PV-leasing company Sungevity has pinned down $85m of project financing as it takes aim at fast-expanding rivals like SolarCity, which launched a high-profile initial public offering last month.

The money comes from private-equity firm Energy Capital Partners and a “leading” but unnamed commercial bank. It follows $40m in equity financing Sungevity raised last year from a variety of sources, but led by Brightpath Capital Partners and Lowe’s, the North American home-improvement mega-store.

The project finance is a “powerful vote of confidence”, says chief executive Andrew Birch, and allows the company to expand its solar-leasing offerings across the nine US states it currently targets, mostly in the southwest and northeast regions.

Like rivals SolarCity and SunRun, Sungevity installs PV panels on residential rooftops at little or no upfront cost to the homeowner – and thus benefits from ongoing PV price declines. Customers typically receive a reduction on their electricity bills and the feel-good factor of owning PV panels, while Sungevity pockets all relevant tax breaks and most revenues from selling the excess electricity.

The solar leasing sector, which has caught on much faster in the US than other developed PV markets, received a burstt of attention when SolarCity, backed by Tesla Motors impresario Elon Musk, went public last month.

Initially discounted to $8 in a bid to drum up investor enthusiasm, SolarCity shares closed at $13.72 on 15 January.

Sungevity continues to flesh out its management team, with chief technology officer Steve Atherton and general counsel Walter Conroy poached in late 2012 from SunRun and MEMC-owned SunEdison, respectively. Chief executive Andrew Birch is a BP Solar veteran.

Based outside San Francisco, Sungevity says it reduced its installation costs by 30% in 2012 by using web-based tools and satellite imagery to give potential customers pricing quotes within 24 hours without actually visiting their homes, and then relying on a network of “preferred local installers” to put the panels in place.

The company is also leaning more heavily on word of mouth and partners like Lowe’s to avoid what it calls the “common industry hurdle of high-cost customer acquisition”.

“While overshadowed by news in the solar manufacturing sector, the downstream market, particularly residential solar, continues to experience rapid growth,” says Brightpath Capital managing partner Rob Davenport.

“Sungevity’s model has demonstrated cost advantages and margin expansion potential that are unique within the sector, and we believe the company is positioned for sustained growth.