In cubicles in Sungevity's Oakland, California headquarters, employees are finessing residential solar bids -- for homes in Colorado.
The company, which has created software that lets its assemble and manage residential solar projects over the web, has to date concentrated on solar deals in California, Colorado and Arizona. Today, it is announcing a $15 million round of financing that will let it expand to the other solar markets in the U.S. while staying centralized, said founder Danny Kennedy. In 2011, it is looking at expanding internationally and rolling out a Spanish-language version of its service in the U.S.
Business, Kennedy adds, is booming. Installations, measured in terms of kilowatts, are up by a factor of ten this year, and the total number of installations are up 9x. The company booked 1 megawatt worth of solar deals in October alone. Its market share in California has grown from 0.4 percent to 2.9 percent.
Like competitors SolarCity, SunRun and others, part of Sungevity's explosive growth comes through solar leasing, which allows consumers to skip the down payment. More than 99 percent of the deals that were booked in One Megawatt October revolved around leases, he said.
Both SolarCity and Sungevity have exploited the power of software to reduce the cost of solar installation, which can still account for a third of a residential system. Sungevity's software examines satellite imagery of a rooftop as well as data on the pitch of the roof, local solar radiation, and the angle of the roof toward the sun, among other factors, in order to concoct a bid on a project. The software has been fine-tuned over the past few years. Sungevity projects now are almost one kilowatt larger on average than they were 2.5 years ago.
Once a contract is signed, the company then manages the project -- submitting the paperwork for tax credits, ensuring the work passes muster with local building codes, etc. -- through its central office in Oakland and sees it through completion. In a sign of how bureaucratic solar has become, approximately 30 percent of Sungevity's employees spend their days on the web equivalent of paperwork. Building codes change from city to city; thus, each new zip code means a stroll through some jurisdiction's permitting process.
The two firms differ, however, when it comes to the actual installation. SolarCity does the installations itself, hiring employees in various states to erect solar systems. Sungevity instead uses subcontractors, managing the design of the system and sending out field agents to make sure the work gets done correctly, but relying on third parties to actually wield the drills. (SolarCity, by the way, has also been expanding rapidly. It raised $21 million this summer and serves over 1,000 communities.)
As a result, SolarCity keeps more of the revenue from each solar project it takes on, but Sungevity, Kennedy argues, takes on less risk and can be more nimble. At the other end of the spectrum, some companies just license software to solar developers, which reduces both risk and revenue.
Lately, we've read many panicky warnings that VCs and others are turning away from greentech. In December:
--Abound Solar raised an additional $110 million and nabbed a $400 million DOE loan to make cadmium telluride solar modules.
--OPOWER raised $50 million from Kleiner Perkins and Accel for its software service to help lower utility bills.
--Clean Power Finance has quietly raised a round with Kleiner and others.
--Soladigm got $30 million for electrochromic windows. (Last month rival Sage Electrochromics got $80 million in a strategic investment.)
--Fallbrook Technologies raised $39 million for its funky transmission.
--In green IT, Azzurro raised $19 million and Racktivity raised $8 million.
--And THT Heat Transfer Technology got $14 million.
That's around $263 million -- and we haven't even added in the small deals like the $3 million given to Diverse Energy.
If things stay this bleak, it may soon be time to close up shop.