Solar leasing and financing company Clean Power Finance (CPF) announced on April 8 that it closed a $37 million round of investments in the company from new and former investors. Among the new investors are Edison International, which owns utility giant Southern California Edison and Hennessey Capital. The investments will allow the company to continue to grow its business after a successful 2012, which saw mercurial revenue growth. The company is engaging a diverse set of investors, including utilities, to ensure that it makes partners of them rather than enemies, which could be occurring with other residential solar third-party ownership companies.
CPF has approached the residential third-party ownership or solar as a service market, which includes solar leases and power-purchase agreements in a different way than most of the other companies in the space have. Companies like SolarCity, SunRun and Sungevity, are offering leases and PPAs under their name. CPF acts more like a car lease financier, providing a white-label service that installers can market as their own.
The approach has proved successful thus far. “We grew revenue by 325 percent last year. Our rapidly growing market share and strong momentum across all areas of the business attracted power company investors that recognize the value of our solar marketplace business model,” says CPF CEO Nat Kreamer.
The company is managing more than $500 million in project financing on behalf of its investors, which include Google Inc., Morgan Stanley and a top 10 utility company that it has not named. CPF says that utility holding companies are becoming more interested in residential solar, and that a total of three utility holding companies participated in this round of financing.
NRG Energy, another energy generator and utility owner recently launched its own residential third-party ownership subsidiary, NRG Residential Solar. However utilities may be wary other solar as a service companies. “Our competitors (SunRun, SolarCity, etc.) compete with utilities to own the customer and the asset (the solar system). We are a market-making business: we do not want to own the customer or the asset, so it's easier for power companies to work with us,” CPF says.
“Clean Power Finance provides outstanding services to both solar investors and solar professionals, and makes distributed solar an attractive investment,” says Edison International’s Bert Valdman, SVP of strategic planning. “We expect distributed solar to play a growing role in our energy future. CPF’s industry leadership makes it a natural investment in this rapidly expanding market." As new investors Edison and Hennessey joined existing investors, Google Ventures, Kleiner Perkins and Claremont Creek Ventures in this round of equity for the company.
This round of financing will support CPF’s growth as a company, rather than support more solar leases or power-purchase agreements. It will help the company accelerate development of software for its various customers and supporters, and develop new financing products including loans and debt products, as well as PPAs and leases to new markets, the company says.