Sunrun Inc., the leading provider of residential solar-power systems in the U.S., plans to raise $100 million through debt or an initial share sale, adding to the $60 million in funding investors awarded it last week.
“We view this as really early days,” President Lynn Jurich said in an interview. “This has the potential to be a huge energy company.”
The $100 million will be spent on purchasing solar panels, Jurich said. Panel prices slumped 21 percent as supply grew by more than half in 2011 from 2010, mainly because of a glut from Chinese manufacturers, according to data compiled by Bloomberg. This has benefited Sunrun, which purchases the equipment, configures it for residential use and then leases the system to homeowners for 20-year terms.
Less than 0.1 percent of U.S. houses today are topped with panels, a number that’s expected to climb to 2.4 percent by 2020, Bloomberg New Energy Finance estimates. Like all solar companies, Sunrun gets a tax credit for 30 percent of the cost of a system it installs. State incentives are also available.
“Solar as a service is tracking exceptionally well,” said Steve Vassallo, a general partner at Foundation Capital in Menlo Park, California, which invests in Sunrun. “All the bankers are chasing them. It’s enthusiasm about growth.”
San Francisco-based Sunrun said May 23 that it raised $60 million to invest in software development that can make solar projects more efficient and less costly. The company has raised about $145 million in venture financing since its 2007 inception, Jurich said.
Sunrun is discussing additional fundraising options with U.S. Bancorp, JPMorgan Chase & Co., Goldman Sachs Group and Wells Fargo & Co., Jurich said. Previous investors include U.S. Bancorp, Foundation Capital, Madrone Capital Partners LP, PG&E Corp., Sequoia Capital and Accel Partners.
Jurich said the IPO option will hinge in part on the performance of rival SolarCity Corp., which said last month it would sell shares. As a group, IPOs in North America that began trading this year have slumped 4.5 percent, according to data compiled by Bloomberg. Facebook Inc. shares have tumbled 26 percent since they began trading on May 18.
“There will be a push-back because of the Facebook disaster as well as the reliance on government subsidies,” said Tom Taulli, who runs IPOPlaybook.com in Newport Beach, California. Still, companies that lease or install panels “can benefit from the lower prices,” he said.
U.S. Bancorp spokesman Tom Joyce, Wells Fargo spokeswoman Elise Wilkinson and Goldman spokesman Michael DuVally declined to comment. JPMorgan spokeswoman Kristen Chambers didn’t return e-mail and telephone requests for comment.