Sunrun Investec deal completes bumper week for US residential PV investment

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Sunrun has closed a financing deal with Investec worth US$195 million, meaning that over half a billion dollars of investment has gone into the US residential solar sector across just two deals this week.

Specialist banking and asset management group companies Investec Inc and Investec Bank yesterday announced the close of senior credit facilities for Sunrun. Coupled with JP Morgan’s deal with Sunrun’s rival SolarCity from earlier in the week, which is worth more than US$350 million, the deals add up to a US$545 million commitment.

The Sunrun-Investec deal will be used to “help more Americans install high quality solar systems on their homes and reduce their electricity costs”, Sunrun said, without going into specifics. However, Sunrun, which focuses exclusively on residential installations announced major expansion plans in September, when it was revealed the company is looking to recruit 800 new members of staff and roll out its operations to four more US states while expand its existing offerings in others.

The Sunrun deal will be two-tiered as non-recourse financing. The senior element of the deal will be worth about US$171 million while the subordinated facility is valued at US$24 million. Investec acted as sole bookrunner and assembled a syndicate of lenders for the senior portion of the loan.

Sunrun said the deal was the company’s first syndicated financing and hailed it as a new source of capital.

Ralph Cho, co-head of ower at Investec added: “Sunrun trusted our distribution capabilities and we were able to deliver a syndicate of lenders, which included several first-time lenders to the U.S. residential solar market. The financing was met with strong interest and was oversubscribed.”

SolarCity, meanwhile, is active in the commercial sector and energy storage as well as residential solar leasing, but the JP Morgan funding is understood to be earmarked to support the company’s efforts in the residential space.

Major investment institutions appear to have been increasingly willing to view solar as an asset class in recent times. UBS put out several reports last years which highlighted the increasing competitiveness of solar in coupling with storage systems, while Barclays downgraded the entire US electricity market in response to the disruptive threat to utilities posed by such technologies. Consultancy group Mercom Capital praised solar’s status as a low-risk investment choice in a report issued earlier this week.

In other Sunrun news, Lynne Jurich, chief executive of Sunrun, issued a set of predictions for US solar for 2015 yesterday to press. In it she hailed the success of the industry in 2014 to combat “monopoly utility attacks on rooftop solar” and proclaimed that 2015 would be “the year of the consumer”.

“The single most important success factor for residential solar companies in 2015 will be how they prioritise their customers. With companies that offer solar as a service, consumers for the first time have a choice in how they purchase electricity – clean electricity – and are served as a customer, not treated like a ratepayer or a number,” Jurich said.

From the industry’s side of things, Jurich said, ‘big data’, software and other technological advancements would play a major part in driving residential solar adoption onwards.

“Already we’ve seen the emergence of new software and tools in the residential solar industry that keep the consumer in mind – tools that improve the ease and speed of getting solar on their home making for a better customer experience.

“In 2015 we will see this trend progress even further in the residential solar segment as the largest players in the industry become more sophisticated at reaching and engaging consumers,” she concluded.

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