Sungevity has secured $50 million worth of solar leases and expects to have the financing to continue expanding into other states.
The company today announced a deal with Citigroup where the bank will provide financing for a "couple thousand" residential solar panel installations, according to Sungevity Chief Financial Officer Mac Irvin.
With a solar lease, a homeowner avoids the large upfront cost of buying solar panels and instead pays a monthly fee to Sungevity, which owns and maintains the panels. The leases are structured so the home owner's electricity bills will go down because of the electricity generated by the solar panels.
Sungevity expects to secure another financing arrangement by the end of the year, which will give it funds to operate "well into 2012," said Irvin.
Like other solar financing companies, Sungevity started in California where it continues to see the bulk of demand. But Sungevity earlier this summer expanded to East Coast states. Its leases are available in California, Arizona, Colorado, New York, Massachusetts, New Jersey, Delaware, and Maryland.
The company is seeking to differentiate itself with an online application that quickly generates a quote specific to a home. It's also marketing solar power as a lifestyle choice, said John Ordona, the director of brand engagement.
The falling prices of solar panels help make solar leases more broadly available. But the main economic factors for deciding to go solar--whether through financing or a purchase--are the cost of electricity and state-level rebates, which are funded by electricity ratepayers. There is a federal 30 percent tax credit for renewable energy purchases in place until 2016.
"The political trends in this space and the incentives to go green and have more solar energy are very strong and very positive," said Irvin. "We're in eight states now. I think being in 20 states in three years is within the realm of reason."
Having banks commited to provide funds for Sungevity's solar leases until next year is significant because a possible change in federal solar subsidy will make financing harder to secure.
Right now, the federal tax credit comes in the form of a cash grant, a change that was put in place in the wake of the economic downturn that started in late 2008. But after this year, it could go back to tax equity funds, which rely on corporate profits to offset tax credits. That change will narrow the number of institutions able to finance solar leases. "It's going to be a different game," said Irvin.