Investors may not be so keen to put money into solar manufacturing these days, but they are pumping quite a bit of money into solar financing and installation. San Francisco-based Sunrun is benefitting from this investor sentiment and announced on Wednesday that it’s raised $60 million in equity funding.
The company provides leases or power purchase agreements to consumers who pay a monthly fee for the electricity from the solar panels installed on their rooftops. This way, the home owner doesn’t have to pay the expensive, upfront cost of the equipment and installation but still gets to use a cleaner source of power. Lease or power purchase agreements are long-term contracts – 20 years for those from Sunrun – that sometimes guarantee consumers lower electric rates than what they have been paying their utilities. This model has become popular in states such as California and Massachusetts.
Sunrun is part of a group of startups that set up shop about half a dozen years ago to tackle the emerging solar retail service market. Sunrun provides the financing and owns and maintains the solar equipment, and it’s built a network of contractors that do the installation work and help market Sunrun’s financial services. The company said it has has more than 20,000 customers in 10 states since its inception in 2007.
Since then, the solar retail service market has grown tremendously, and competition also has intensified. The company has run bill board ads and launched a new marketing campaign recently. Other solar service companies have used the same types of advertising as Sunrun. Some team up with nonprofits to market their services. Sungevity, for example, announced Wednesday it’s working with the Sierra Club, and customers who go to a Sierra Club website to sign up for Sungevity’s service will get a $750 cash gift card. Sungevity also will then donate another $750 to the Sierra Club.
Some of Sunrun’s venture-backed competitors include SolarCity, Sungevity and Clean Power Finance. SolarCity plans to do an initial public offering, and Sunrun, which recently hired a chief financial officer, could also be heading in that direction, too.
Overall, Sunrun has raised $145 million in venture capital. The latest round came from investors including Madrone Capital Partners, Accel Partners, Sequoia Capital and Foundation Capital.