Paramount Solar, a branch of Paramount Equity, just got a major infusion of tax equity financing from U.S. Bank.
The Paramount Equity Fund, created in partnership with U.S. Bancorp, is a step toward independence for Paramount Solar. The firm previously worked with financial products offered by SolarCity, Sunrun, and Clean Power Finance (CPF). Paramount is known in thesolarindustry as “a closing machine” for its success at selling residential systems.
Though the companies involved did not disclose the total amount of the bank equity fund, Paramount said it will finance “approximately 1,600 residential solar systems.” Back-of-the-envelope math suggests that the U.S. Bank fund is in the neighborhood of $18 million.
Paramount Equity’s solar branch is the latest addition to the company’s financial offerings, which include mortgage and insurance products and and share a focus on customer acquisition and deal closing.
Because of its proven skill at closing, this Paramount fund is expected to sharpen competition in the third-party ownership (TPO) segment that has driven solar growth in the last three years. TPO was started by Sunrun and is championed by SolarCity, CPF, Vivint, NRG Energy, Sungevity, SunEdison, and SunPower. TPO employs a lease or lease-like arrangement to provide rooftop solar installations to homeowners and businesses without burdensome upfront investments or ownership responsibilities.
Solar was “a natural play for us because we focus on saving residential homeowners money on the largest bills in their lives,” Paramount Solar CEO Hayes Barnard recently told GTM. Paramount customers “typically refinance or get a home loan to purchase a home seven times in their life. We look at the lifetime value of a consumer.” With solar, “we can be in a partnership with them for twenty years.”
Paramount Solar advertises in multiple media but has had its biggest successes in solar customer acquisition through direct mail and email.
When a call comes in, Paramount’s software uses basic parameters like the customer’s ZIP code, the utility involved and the system type to allow phone salespeople to choose between the SolarCity or the CPF platform, according to Todd Lindstrom, Paramount's senior VP of operations. Deals are closed on the phone and the installation proceeds from there.
While it continues to work with SolarCity, Paramount Solar chose the CPF software platform for the Paramount Energy Fund.
“We like it that we have multiple financial products we can choose from,” Lindstrom explained. “It is less whether it is SolarCity or CPF than the funds. Every fund reacts differently to different factors. Some respond well to big pre-payments; others respond well to a twenty-year revenue stream from the avoided cost of electricity.”
Paramount Solar is building the capability to have a strong fund for each situation, Lindstrom said. It chose CPF’s software platform because it will allow Paramount the freedom to do that.
“CPF’s business model is that they have two kinds of clients: money clients and contractor clients,” Lindstrom explained. “We asked to be both. We will be a money client and contract with CPF to create software for our fund. And we will also contract to use the CPF software to deploy the fund. They were very flexible and very quick in setting up that arrangement.”
The CPF platform allows Paramount to manage all the steps in the rooftop solar installation process, including the sales discussion, the system’s design and financing, and the monitoring and maintenance of the working system.
“We created the CPF Market to enable our customers’ diverse business models,” said CPF CEO Nat Kreamer. “The Paramount Energy Fund demonstrates the flexibility of our model.”