Recurrent Energy gets dough for solar-as-a-service
Clean Energy Partners commits $75 million to expand Recurrent Energy's power purchase agreement business to own and maintain large solar installations.
Solar company Recurrent Energy on Wednesday announced a $75 million partnership, a deal that highlights the financial models being developing to serve the clean energy industry.
Private equity firm Hudson Clean Energy Partners has committed the money to fund expansion of Recurrent Energy's business, where it installs and maintains large solar arrays at corporations and other organizations. The deal was announced at the Intersolar 2008 conference in San Francisco.
Rather than sell the panels, companies like Recurrent Energy install the solar panels on the customer's premises and then sell the electricity to the customer at a preset rate for 20 or 25 years.
This type of contract, called a power purchase agreement (PPA), is helping fuel the fastest growing segment in the solar business. Companies or municipalities don't need to front the expense of the solar gear, making a choice to use distributed energy much easier.
But these solar-as-a-service companies need to getto back their services. Venture funds focus on technology-oriented enterprises and don't have enough capital to finance large-scale solar projects.
As a result, private equity and hedge funds are starting to offer financing for clean-energy projects or to commercialize technology developed by clean-tech start-ups.
"We anticipate that this is just the beginning of an even larger financing relationship, and we are committed to providing Recurrent Energy with the resources it will need," said Neil Auerbach, founder and co-managing partner at Hudson, in a statement.
There are a handful of companies also seeking to apply the power purchase agreement model to.