This month, San Francisco-based solar software company kWh Analytics announced that it had raised $5 million in Series A venture capital to support the scaling-up of the company’s solar data platform as well as its new “PowerLock” insurance product.
As readers may remember, in 2013, kWh Analytics CEO Richard Matsui penned a guest article Plugged In in with his then CTO Nick Malaya on the “Key to Unlocking Capital in the Solar Industry.” In this article, Matsui and Malaya discussed the challenges facing the solar industry when it comes to attracting investors, stating that:
“Today’s institutional investors are not comfortable investing widely in the solar power asset class because they don’t yet believe that they will realize the promised return on their investment. As a result, financing costs remain one of the largest remaining expenses for solar projects.
Solar investments are attractive to investors because the sun is of course reliable, and that the investments are also wholly uncorrelated with the rest of the financial markets—which is a highly unusual and valuable characteristic. But, investors still demand solar project IRRs in the double-digits, while other safe investments receive much lower returns
That isn’t to say that the solar industry isn’t growing – of the 100 GW of solar currently installed around the globe, 2/3 of that was built in the last 2.5 years. But, this growth could be greatly accelerated by reducing project financing costs.
Two types of data are needed to help reduce financing costs and spur growth in the amount of capital available to solar projects.
First, data on the physical asset. That is, how much energy is generated in a specific location by a particular panel brand, inverter model, etc.
Second, data on the financial asset. Data related to the customer themselves to provide an indication of the chance that a person or company will pay back a loan – similar to a credit check before one is issued a credit card or mortgage.”
In response to this need for better data access, kWh Analytics has pulled together the industry’s largest independent dataset of solar assets. This dataset now includes performance data from more than 70,000 photovoltaic systems across thousands of sites with associated weather patterns and is the basis for the company’s “HelioStats” tool. This model allows investors to calculate the expected performance for proposed solar projects.
In their latest project, “PowerLock”, Matsui’s company is offering an insurance product to further support solar projects. According to Matsui:
“By offering an A-rated insurance-backed production guarantee that protects lenders and asset owners alike, we are making solar truly bankable. PowerLock removes a major source of risk to lenders, enabling them to safely deploy more capital at lower cost. By exchanging uncontracted energy estimates with contracted energy guarantees, PowerLock significantly enhances the value of solar assets.”
kWh Analytics's successful Series A Round of funding was led by Anthemis Group (a venture capital and strategic advisory firm specializing in digital financial services) with ENGIE (the world’s largest independent power producer).