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Summary:

Bringing solar energy to the masses is generating sunny interest from investors these days, and SolarCity announced Wednesday that it has raised $81 million in equity to continue building its empire.

SolarCity installation

Solar installer SolarCity has raised $81 million to expand its rapidly growing solar rooftop empire. The round is a whopper for the solar installation business, which usually sees much smaller rounds.

The equity deal is one of the first for Silver Lake Kraftwerk, a cleantech fund announced a year ago and was planning on building a fund with investment from George Soros. The fund has raised $206 million out of a $1.25 billion target, according to its government filing last December.

Overall, SolarCity has raised just over $200 million in venture capital, said company spokesman Jonathan Bass. SolarCity said it will use the new funding for expanding sales, technology development and even acquisitions.

SolarCity, based in San Mateo, Calif., installs rooftop solar panels for homes, businesses and other organizations. The company made a name for offering leases – or power purchase agreements – that take away the need for customers to pay the expensive upfront costs of installing and owning the equipment. Consumers pay a monthly fee and are promised to see lower utility bills as a result of going solar. This model has grown in popularity since SolarCity’s start in 2006. It also creates an investment opportunity for banks and others to finance installations.

SolarCity has lined up funds to install its solar panels from the likes of Bank of America, U.S. Bancorp and Google to finance solar installations and the leases. The installer also has become more ambitious in the size of projects it undertakes: one of the most recent agreements involved getting $350 million from Bank of America to install about 300 MW on military housing over a 5-year period.

Founded in 2006, the company started off in California and now serves mostly the West and East Coasts. It has expanded its services lately. It now also installs electric car charging stations and offers energy efficiency audits for homes.

SolarCity is reportedly getting ready to file for an initial public offering. It also is embroiled in a lawsuit filed by SunPower earlier this month. SunPower is alleging that five of its former employees who left to work for SolarCity downloaded confidential data, including pricing forecasts, contracts and market analyses, from their SunPower computers.

There seems to be a trend of cleantech startups raising a significant round before they are set to debut on the public market. Solar electronics developer Enphase Energy, which is waiting to go public, raised $21.86 million. Smith Electric Vehicles began to raise $40 million after filing for an IPO last November, and it recently secured a letter of intent for both a $25 million investment and a joint venture deal from Chinese automaker Wanxiang Group

Aside from Silver Lake, other investors in the round for SolarCity include Valor Equity Partners, Shea Ventures (an affiliate of Shea Homes) and individuals such as SolarCity chairman and Tesla Motors’ CEO Elon Musk and Nicholas J. Pritzker, a partner at Tao Ventures and an advisor to Hyatt Hotels.

Photo courtesy of SolarCity

  1. Private equity and VC investors should wake up and look at the comparables. With companies like WFR (parent to SunEdison) and SPWR valued at significantly less than $1B, with significantly more revenue, MW deployed, technology, and pipeline, I’m not sure how they are going to get their money out of this with $300M or so of venture captial invested to date.

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    1. Rooftop solar market is hardly saturated,so why wouldn’t there be opportunities for startups in this space? Plus, SolarCity is expanding beyond rooftop installations. It’s targeting the general energy efficiency market for homes (maybe business later) and seems to be trying to do what some other energy efficiency audit/retrofit and energy management tool/software companies tried but didn’t succeed — those failures had to do with timing and money.

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  2. but … But … SOLYNDRA!!! So there.

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  3. Solyndra/Sun Power manufactures panels and competed with global (chinese) manufacturers. SolarCity competes against the utility, big difference.

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    1. SolarCity is after large-size residential/commercial projects, and so does SunPower. SunPower not only works with dealers/installers but also does direct sales. It helps commercial customers line up project financing, hires installation crews and offers operation and maintenance services. So the two companies do compete against each other and compete more closely than ever.

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      1. Christopher Williams Tuesday, March 6, 2012

        The other benefit that SC is bringing to the table is the value of cross-selling that SunPower does not have. The lifetime value of a residential customer is much higher for SC then it is for SunPower.

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  4. The other benefit that SC is bringing to the table is the value of cross-selling that SunPower does not have. The lifetime value of a residential customer is much higher for SC then it is for SunPower.

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