The United States’ second-largest residential solar provider, Vivint Solar, announced this week that it has received commitments for an additional $100 million of tax equity financing which will be used to support the rollout of over 55 megawatts (MW) of residential solar energy systems.
Only a few days after Wood Mackenzie Power & Renewables’ US PV Leaderboard confirmed that Vivint Solar had returned back to the number two spot for US residential solar installers, overtaking the lagging Tesla solar division, the company announced the close of $100 million in new tax equity commitments. The new financing is expected to help Vivint Solar install over 55 MW of new residential solar, amounting to over 8,000 new residential solar systems.
“We believe this tax equity raise, along with the recent $360 million multi-party forward flow funding arrangement, reflects the capital markets’ and our investors’ continued confidence in Vivint Solar’s sustainable growth model,” said David Bywater, CEO of Vivint Solar. “We are committed to not only delivering results to our investors but also helping more homeowners access our solar energy systems.”
The syndicated tax equity commitment was raised by Toronto-based RBC Capital Markets and co-investors arranged by RBC’s Tax Credit Equity Group.
“Vivint Solar has a leading residential solar platform that we are pleased to support with our tax equity capital alongside that of our co-investors,” explained Julian Torres, a Director at RBC. “This transaction is a credit to the teamwork across the RBC platform and highlights our unique capabilities of direct investing in and syndication of renewable energy tax credits.”
“The ongoing commitment of our investor partners supports our growth and plays an essential role in enabling us to expand our residential solar business,” added Thomas Plagemann, Chief Commercial Officer of Vivint Solar.
Vivint Solar offers four plans to enable customers to install solar panels on their roofs. Two of the plans, the Solar Purchase and Solar Loan, leave the customers as the owners of their new solar system, while the second two plans, the Solar PPA and Solar Lease, sees the system owned by Vivint Solar. The first two plans require a customer to purchase the solar panels themselves, either through an outright purchase or through an affordable monthly payment to a financing partner. The second two plans require the customer to essentially “rent” their solar panels from Vivint Solar, though at a cheaper electricity rate then if they were to rely on their local electric utility. These two plans also, therefore, require Vivint Solar run with a significant level of cash on hand to afford installing a solar system without being paid upfront to do so — given that customers choosing the latter two plans can do so at no upfront cost.
This is why Vivint Solar, and other residential solar companies, are often in the news as beneficiaries of various financing rounds: The financing is necessary to fund these “no money down” solar installations. However, the return on investment for financers and investors continues to be significant, as can be seen by the number of times Vivint Solar and its peers receive new financing rounds.
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