The World's #1 Renewable Energy Network for News, Information, and Companies.
Untitled Document

What You Can Learn from Clean Power Finance's $37M Round

Venture capital investors these days favor startups that are involved in the retail side of the solar business. The latest evidence of that trend comes from Clean Power Finance, which said on Monday that it had raised $37 million from investors such as Edison International.

San Francisco-based Clean Power Finance develops sales software and licenses it to installers. It also offers leases and power purchase agreements that installers can market to homeowners who sign long-term contracts to get solar electricity. The leases or power purchase agreements are funded by banks, solar equipment manufacturers and other investors, and Clean Power Finance is managing those financing products financed by investors such as Morgan Stanley and Google.

There are two takeaways with this announcement. One is that traditional energy companies are taking a greater interest in the solar service sector. Edison owns utility Southern California Edison, which does business in a state that runs a large residential rebate program. California is also setting policies that favor smaller solar energy projects including those built to sell power to utilities, which won't require expensive transmission lines and are closer to the cities they serve.

Clean Power Finance, in its press release, hints that there is one or more energy companies that put money in this round, but it's not allowed to publicize it. In fact, there are three power companies in this fund. Unlike other power companies that have invested in solar, Edison is taking a stake in Clean Power Finance. Companies such as Pacific Gas & Electric and NRG Energy have put up money to finance residential solar leases, so they are hoping to make money from long-term contracts rather from the growth and exit of a startup.

Solar leases typically run 15-20 years and require homeowners to pay a monthly fee for the solar electricity from their rooftop systems. The homeowners don't have to fork over the upfront cost of installing solar panels or, because they don't own the solar system, the maintenance of the equipment.

The second takeaway is that investors are particularly fond of software developers. That means companies like SolarCity would find it difficult to raise venture capital these days even though they are still in the retail segment of the solar industry (many investors are avoiding deals involving solar equipment manufacturing because of the sector's poor returns so far). SolarCity is a full-service company that employs people who do the installation work. It also has to spend good money marketing its service to consumers. This business model requires a lot of money to scale. SolarCity started out early enough and excelled at raising money (having Elon Musk as an investor helps) before it went public.

More solar companies that offer leases have foregone the need to have in-house installers. Sungevity hires contractors to do the installation work but spends money on branding and marketing its service directly to consumers. SunRun markets its financing packages to installers and also creates advertising campaigns aimed at consumers.

Clean Power Finance, on the other hand, describes itself as a "white-labeled software and financial services provider." It has a more strictly business-to-business model. The installers are resonsible for their own branding and marketing of the financing options. Customer acquisition, the industry lingo for converting a shopper into a buyer of your product and services, makes up a big chunk of a company's expenses.

Clean Power Finance says it more than tripled its 2012 revenues. It makes money from collecting a transaction fee for every solar lease sold, managing fees from financiers of solar leases and power purchase agreements, and from licensing its sales software.

Aside from Edison, other investors in the $37 million round include Hennessey Capital, Kleiner Perkins Caufield & Byers, Claremont Creek Ventures and Google Ventures. Clean Power Finance has rasied 3 rounds totaling $62 million since its inception.

Untitled Document

RELATED ARTICLES

Sunrise in Pakistan as the Country Delves into Solar PV

Robert Harker Pakistan has joined the list of countries that are exploring solar power as a means to bridge critical energy generat...

Global Renewable Energy Roundup: China, Kenya, Turkey, India Seeking More Renewables

Bloomberg News Editors China is being encouraged by three industry groups to double the nation’s solar-power goal for 2020 to make up for sh...

Why Smarter Grids Demand Smarter Communications Networks

Mark Madden

Historically, utility networks and communications networks have had little in common.

The Importance of “Switching Costs” to the US Residential Solar Industry

Paula Mints The DoE and numerous organizations and governments globally are focused on driving down the cost of solar convinced t...

PRESS RELEASES

Free ImagineSolar Online Course Demonstration

ImagineSolar will be holding another live demonstration of PV250e: Solar PV Economics a...

Canadian Solar Announces Partnership in 200 MW Tranquility Solar Power Project

Recurrent Energy signed an agreement with Southern Power to partner on the Tranquility ...

AWS Truepower Announces Major Expansion of its Due Diligence Team in Response to Growing Market Demand

AWS Truepower, an international leader in wind and solar energy consulting and engineer...

FEATURED BLOGS

NATiVE Recognized for Excellence at 2015 Greater Austin Business Awards

NATiVE Recognized for Excellence at 2015 Greater Austin Business Awards NEWS RELEASE AUSTIN, Texas – Aug. 27...

Solar Energy Means Jobs, Savings, and a Low-Cost Future [infographic]

There are a lot of utility-sponsored legislative and regulatory attacks on solar energy lately, and we put together t...

How To Get People To Do Stuff

It’s no secret that psychology and sales go hand in hand. If you understand the principles of human psychology ...

FINANCIAL NEWS

Ucilia Wang is a California-based freelance journalist who writes about renewable energy. She previously was the associate editor at Greentech Media and a staff writer covering the semiconductor industry at Red Herring. In addition to Renewable En...

CURRENT MAGAZINE ISSUE

Volume 18, Issue 4
1507REW_C11

STAY CONNECTED

To register for our free
e-Newsletters, subscribe today:

SOCIAL ACTIVITY

Tweet the Editors! @jennrunyon

FEATURED PARTNERS



EVENTS

Intersolar North America 2016

Exhibition: July 12 - 14, 2016; Conference: July 11 - 13, 2016 Intersola...

Intersolar South America 2015

Exhibition and Conference: September 1-3, 2015 Intersolar South America ...

Intersolar Europe 2016

Exhibition: June 22-24, 2016; Conference: June 21-22, 2016 Intersolar Eu...

COMPANY BLOGS

Less Is More

When you’re giving a presentation, one of the easiest things to do...

Captivology

One of the biggest challenges we face as efficiency sales professionals ...

How To Optimize Your Meeting Schedule

Do you spend more time in meetings than you do actually working? While m...

NEWSLETTERS

Renewable Energy: Subscribe Now

Solar Energy: Subscribe Now

Wind Energy: Subscribe Now

Geothermal Energy: Subscribe Now

Bioenergy: Subscribe Now  

 

FEATURED PARTNERS