Mercatus Inc., a startup developing technology to facilitate financing for renewable-energy projects, received $2 million to commercialize its system that helps evaluate the risk of investing in solar plants.
Vision Ridge Partners LLC led the Series A funding round, which also included Augment Ventures, according to a statement today from Santa Clara, California-based Mercatus.
Backers’ growing interest in solar power is hindered by the due diligence required for each potential investment, said Chief Executive Officer Haresh Patel. Combing over hundreds of pages of data adds a “grunge factor” to the lending process, a task that may take months for large power plants, he said. The automated Mercatus system cuts that to about a week.
“The old way of doing due diligence on large nuclear or coal plants is dead,” Patel said in an interview at Bloomberg headquarters in New York.
Due diligence is just as time-consuming for small and mid-sized solar plants as it is for larger projects. For banks, power producers and hedge funds that want to invest in solar energy, the effort to evaluate projects of about three megawatts and below may outweigh the smaller potential return, Patel said.
Developers upload details about their projects, including panel suppliers, construction timelines and local regulations, and the tool uses the data to generate a rating to help users evaluate them. The score is akin to the credit ratings that banks use to evaluate the risk of consumer loans, Patel said.
“We work with the developers for the investors and provide a match-making service,” Patel said. “We want to be the FICO score of solar projects.” Developers pay Mercatus a fee to use the service, which he said makes it easier for them to get funding.