The solar supply chain is seeing capital flow all the way down to companies involved in putting panels on your rooftop. Today SunRun, a residential solar financier, raised $12 million in financing from venture firm Foundation Capital. As a “solar financier,” San Francisco-based SunRun sets up agreements to allow homeowners to buy the electricity coming off their roof from a third party that owns the panels (like Akeena Solar, which SunRun partnered with last month) — this arrangement, called a power purchase agreement, helps defer the upfront cost of putting solar panels on homes.
A confluence of events has given residential solar companies, especially in the Bay Area, a huge boost. The local utility PG&E recently notified the state’s Public Utilities Commission that it would be instituting a 4.5 percent rate hike in October and another 2 percent rate increase in January due to the rising cost of natural gas. In addition, the city of San Francisco just signed into law the country’s largest municipal solar incentive program, which is set to dole out $3 million for residential solar, up to $6,000 per rooftop.
SunRun is not the only one taking advantage of good market conditions. Berkeley, Calif.-based Sungevity wants customers to take advantage of the new SF incentives and can offer entire solar systems for as low as $2,000 after rebates — about the cost of a flat screen TV. SolarCity also offers a leasing program that uses the city’s rebates so customers don’t have to pay anything down.
SunRun’s funding also suggests that investors are taking seriously power purchase agreement’s (PPA) ability to work in the residential market. PPAs have long been used in the commercial solar market but increasingly residential solar startups are adopting the model. And a new competitor for SunRun, Helio Micro-Utility, just introduced its “Helio Green Energy Plan,” a branded PPA, which the startup hopes will work in the Santa Monica, Calif., market.
This is Foundation Capital’s first foray into solar. Its cleantech portfolio is mostly populated by smart grid companies, including eMeter, EnerNOC and Silver Spring Networks. The firm says it currently has more than $150 million invested in cleantech — by far its smallest sector of investment.