| SAN FRANCISCO, June 24
SAN FRANCISCO, June 24 SunRun Inc, a start-up
that sells cheap solar power to homeowners, has raised $12
million from venture capitalists, the company and lead investor
Foundation Capital said on Tuesday.
The year-and-a-half old start-up, based in San Francisco, is
one of several solar power companies that see a business in
pushing alternatives to traditional electricity as consumers
increasingly seek out more environment-friendly options.
Yet many people have shied away from using solar power
because it is too expensive. The average cost of buying and
installing a residential solar power system is $30,000, said Nat
Kreamer, SunRun's co-founder and chief operating officer.
One of the reasons for that is that most people have to buy
the photovoltaic panels that capture sunlight, he said.
SunRun, on the other hand, owns the panels that it installs.
Customers pay upfront to guarantee electricity supply, locking
in a per-unit rate for the power they consume for a specified
time period -- usually about 20 years.
The upfront payment is about one-third the amount people
would have to pay to install solar panels, Kreamer said.
The few hundred California homes that buy solar power from
SunRun pay between 13.50 cents and 16 cents per unit, Kreamer
said, while the average cost per unit of traditional electricity
is 24 cents, he added.
"People are used to paying on a per kilowatt-hour basis,"
Kreamer said. "I don't want to own the road in front of my home,
and I don't want to own the hardware that supports my electrical
SunRun's "full-service business model brings a
cost-effective product to an underserved market," said Parker
Weil, who heads Merrill Lynch's clean energy investment banking
Forty-five percent of respondents who earn less than
$100,000 a year would buy solar power this way in the next 12
months if it were available where they lived, according to a
study of 1,100 California homeowners by Wilson Research Group.
Overall, the market for photovoltaic panels -- the primary
way of harvesting solar power -- is expected to grow to about
$69 billion by 2016, nearly three times the $15 billion market
opportunity it was in 2006, according to a report by Clean Edge.
SunRun is not the only company aware of the potential
demand. Akeena Solar Inc AKNS.O sells commercial and
residential solar power systems, as do privately held SolarCity
and Helio Micro Utility Inc, among others.
Helio earlier this month began selling solar power to some
locations in California at rates lower than what people pay for
traditional utilities, the company said recently.
SunRun plans to use the $12 million to "get the message out
on solar," Kreamer said. The company also plans to expand its
service outside California, he added.
SunRun's "solar as a service" model will appeal to a wider
swathe of the residential market, especially given skyrocketing
natural gas prices, said Steve Vassallo, a principal at
"We're always looking for exciting opportunities to make
these clean technologies accessible and deployable to real
people and not just rich people," Vassallo said.
Silicon Valley-based Foundation, which has about $2.5
billion under management, is a technology and clean-technology
focused venture capital firm.
Known for backing EnerNOC Inc (ENOC.O), one of the few
publicly listed U.S. energy efficiency companies, Foundation
raised a $750 million fund in April, and said it would invest
roughly one-third of that amount into clean technology
(Editing by Erica Billingham)