Today’s Deal Radar spotlight shines on California-based SunRun, a company whose aim is to make solar power an affordable reality for homeowners. Founded in January 2007, the company is the brainchild of Nat Kreamer, a longtime solar enthusiast. He had the idea for SunRun while working for Governor Arnold Schwarzenegger’s office and the California Department of Water Resources. Kreamer and his two co-founders, Edward Fenster and Lynn Jurich, founded SunRun to help families buy solar power more easily and make it more affordable for them long term.
Solar systems for homes usually begin at around $25,000. SunRun’s business model makes it cheaper for homeowners to go green by not requiring them to buy and maintain their own solar power installations. Instead, homeowners pay for the electricity SunRun produces on their behalf at a fixed rate. This model allows SunRun to cut a homeowner’s initial cost considerably. The installation of photovoltaic panels – the primary technology for harvesting solar power – is 30 to 50% of the total cost of the system.
On signing a purchased power agreement, which is SunRun’s contract, homeowners pay an upfront fee that is estimated to be less than 50% of installation and equipment costs (the percentage goes down further as the size of the installation goes up). SunRun maintains and operates the solar system free and offers customers a fixed, flat rate for electricity at 13 cents/KwH as opposed to the standard 30+ cents. It also offers services such as washing panels, advanced monitoring and a performance guarantee and flexible options for the transfer or termination of the solar service agreement should the homeowner move.
According to a report by CleanEdge, the market for photovoltaic panels is expected to grow to about $69 billion by 2016, from $15 billion in 2006. The most important state for the solar market is California, the company’s current focus. The state has often been at the forefront of initiatives to increase the use of alternative energy, and earlier this week the governor signed an executive order to streamline the energy project approval process and increase California’s Renewable Energy Standard to 33% by 2020.
Establishing partnerships with leading solar installers like Akeena Solar Inc. and REC Solar helped SunRun establish itself and gain market traction. The company’s customer base grew 900% between April 2008 and October 2008. SunRun plans to expand to additional states in 2009 where its installer partners have already established a presence. SunRun did not provide any revenue information.
In June 2008, SunRun raised a $12 million Series A led by Foundation Capital. It received an initial tax equity commitment from an affiliate of U.S. Bancorp (NYSE: USB) as part of the financing for upto $105 million or 2,000 residential solar facilities, which it will be announcing today. SunRun also appointed industry veteran David Buzby to its board of directors. Buzby is the chairman of SunEdison, North America’s largest solar energy services provider, and will contribute his industry leadership and work closely with SunRun’s founders to develop similar strategies and enter emerging residential solar markets.
This segment is a part in the series : Deal Radar 2008