SunRun Looks To Transform The Home Solar Market With Use Of Bonds to Expand Sales

SunRun is looking closely at using Wall Street debt markets in an ambitious push to expand residential solar sales in the United States.

The solar company says it is considering issuing what would amount to corporate bonds to raise money to finance residential solar leases and other consumer solar installation agreements.

Debt markets are presently used to finance commercial, municipal and utility scale projects, but not private residential transactions. Such a move could open new avenues for home solar financing and potentially expand the market by making more money available.

“It’s a totally new asset class,” says Edward Fenster, chief executive of San Francisco-based SunRun. He says SunRun is well along the path of evaluating the use of bonds.

Other installers are likely to consider issuing bonds as well. It is unclear whether an issue might be floated this year.

Up to now, solar installers have had to endure lengthy negotiations with the handful of banks in the solar financing business to come up with the money for solar leases and power supply agreements for homeowners.

SunRun this month announced just such an arrangement when it said it received a tax equity commitment from U.S. Bancorp to support the purchase of $200 million in residential solar systems.

During negotiations with a bank, an installer must spend considerable effort convincing the institution that it can mitigate the risks associated with the lending. A similar challenge is likely to exist with bond issues as companies approach rating agencies for favorable reports.

In SunRun’s favor are falling prices. Fenster (pictured) says he sees prices for residential solar installations coming down substantially over the next couple years. The average price of installed residential solar panels in the United States is $5.50 a watt. That compares with $3.50 a watt in Germany, due to lower permitting costs and greater industry scale.

He predicts it will be $4 a watt in the U.S. in a couple years.

On a separate topic, Fenster sidestepped a question about plans for a possible IPO. Nothing is imminent, he said. SunRun also doesn’t have plans to raise new venture money, he said.