Sunlight Financial, a fast-growing home solar loan provider, announced this week Technology Credit Union has committed up to $500 million for about 20,000 new rooftop projects originated by Sunlight’s national network of installers.
The announcement marks the startup solar financier's largest single funding commitment to date, and expands on an existing relationship with Tech CU based in Silicon Valley.
“Our partnership with Technology Credit Union and this commitment help to reaffirm what we do as a loan provider focused on originating and underwriting high quality loans,” said Matt Potere, CEO of Sunlight Financial, in an interview. “This commitment helps to support our deep expertise in risk management and consumer lending more broadly.”
He added that his firm is seeing significant demand for their product, which comes as residential solar growth rates have slowed in several major state markets. “What we hear from installers and homeowners is that they prefer loans to leases and PPAs,” said Potere. That's because ownership maximizes customer savings and generally increases the value of their homes, he said
According to GTM Research, more than half of all U.S. residential solar capacity installed next year will be purchased in cash or with a loan — making direct ownership the leading solar financing model for the first time since 2011.
What sets Sunlight Financial apart is the wide range of solar loan products the financier offers, which can be tailored to a homeowner's needs, said Potere. By integrating with solar companies’ existing technology systems and providing access to Sunlight’s online platform, homeowners can also be instantly approved for a loan that allows them to start seeing monthly bill savings. The firm's access to capital in another advantage.
“What's unique about Sunlight is that we are focused on ensuring capital from a variety of sources to support our channel partners' growth, and [the Tech CU] announcement is one example of that,” Potere said. “It allows us to lend in all 50 states … and that is very attractive to our installers.”
The latest funding round builds on a $300 million investment in September 2015, led by private equity firm Tiger Infrastructure Partners and founding investor Hudson Clean Energy Partners. Sunlight Financial also has a warehouse facility with CIT and Silicon Valley Bank.
“This is definitely good news for Sunlight,” said Allison Mond, solar analyst at GTM Research, in response to this week's announcement. “The demand for loans is there, and the biggest hurdle to most solar loan companies scaling to meet that demand is accessing capital.”
“As for the partnership with a credit union specifically, I think it makes sense,” she said. “We know that credit unions are increasingly getting into the solar lending business, so it makes sense for one to partner with an existent solar loan provider who already has relationships with a large network of installers.”