Sources: Clean Power Finance to Acquire PPA Portfolio of Kilowatt Financial

Another turn in a consolidating market

Eric Wesoff June 18, 2015

Eric Wesoff

Editor-at-Large
Greentech Media

Eric Wesoff is Editor-at-Large at Greentech Media. Prior to joining GTM, Eric Wesoff founded Sage Marketing Partners in 2000 to provide sales and marketing-consulting services to venture-capital firms and their portfolio companies in the alternative energy and telecommunications sectors. Mr. Wesoff has become a well-known, respected authority and speaker in these fields.

His expertise covers solar power, fuel cells, biofuels and advanced batteries. His strengths are in market research and analysis, business development and due diligence for investors. He frequently consults for energy startups and Silicon Valley's premier venture capitalists.

Solar finance platform company Clean Power Finance (CPF) has acquired the solar power-purchase agreement (PPA) business of Kilowatt Financial, according to sources close to the deal. Both privately held firms have received funding from Kleiner Perkins.

Last year, Kilowatt Financial channeled $250 million into rooftop solar through Clean Power Finance. But allegiances and business plans are fluid in the solar financing space. This high-growth market is crowded and unconsolidated, while competitors are fighting for market share with big players such as SolarCity, Vivint and Sunrun. (We reported on REC Solar acquiring EPC Stellar Energy earlier this week.)

Since 2011, Kilowatt Financial has focused on credit analysis to finance more than $400 million in solar and energy-efficiency assets. The company will presumably continue to build its solar loan and energy efficiency financing business

Clean Power Finance moves capital from solar finance funds to its channel partners through an online marketplace serving a network of solar installers, many using a third-party-ownership model. CPF has raised $90 million in venture capital since 2006 and has raised more than $1 billion in project finance funds for rooftop solar. Sources close to the company suggest that business was relatively flat from 2013 to 2014, while NRG Solar and Sunnova are winning market share at CPF's expense.

As we reported last year, "Kilowatt’s founders were running a merchant bank, lending in all asset classes, when people from Kleiner Perkins’ Green Growth Fund told them in mid-2011 how challenging it was to find efficient financing for solar and energy efficiency customers. The Kilowatt team determined three things about renewables and efficiency: consumers overwhelmingly favor them for their environmental and economics benefits; they are not a fad and they will increasingly require capital; and of two consumers with similar credit profiles, the one who wants financing for solar or efficiency will 'exhibit superior repayment performance' over the one who wants a loan for a new patio or a vacation."

Nicole Litvak, senior solar analyst at GTM Research, suggests that this is an example of consolidation occurring in the partner solar finance model, as the market girds for battle against the big vertically integrated firms.

GTM has not yet received a response from CPF, Kilowatt or Kleiner.