SAN FRANCISCO - A few years ago, venture capitalists were investing heavily in technologies to make solar energy systems cheaper and more energy-efficient. While those deals are still getting done, investors have more recently shown an increasing appetite for the sales side of the business.
VCs lately are backing companies developing new models for marketing solar systems to consumers, estimating installation costs and helping people finance their purchases.
The latest solar-focused sales company to raise a round of venture financing is One Block Off the Grid (1BOG), which markets installation packages to groups of consumers in select metropolitan areas.
The San Francisco-based company announced last week that it raised a $5 million round of Series A financing from New Enterprise Associates. It plans to use the funding to expand nationwide. Currently, 1BOG offers its services in 12 metro areas, but the company expects to double that.
The company's primary goal, said co-founder and CEO Dave Llorens, is to make it easier for homeowners and installers to arrange purchases of solar power systems.
Right now, the sales process is very complicated, Llorens said. You have to know the difference between an AC watt and a DC watt to compare bids from different installers. The average consumer doesn't know about any of that. It's like a plumber asking you what type of pipe you want.
1BOG's model is to negotiate for group discounts on solar installations, which consumers can then price through its website. Although the price won't be finalized until an installer completes a home visit, Llorens said, consumers will have a pretty close estimate, with incentives such as tax rebates factored in. And if there is additional work needed, such as rewiring in the home, it will have fixed prices that people can see in advance.
The other reason to move to a heavily online sales model, Llorens said, is to help the solar installation industry move away from in-home sales visits, which are time-consuming and limited in reach.
Enabling more consumers to sign up for solar system installations is a central aim of other startups that have raised venture funding in recent months. For example, San Francisco-based Clean Power Finance, which develops a software platform for solar installation financing, raised a $6.9 million funding round in January that was co-led by venture firms Claremont Creek Ventures and Clean Pacific Ventures.
In September, Berkeley, Calif.-based Sungevity announced that it had raised $6 million from cleantech investor Greener Capital to further develop its Web-based sales model, which uses satellite imagery of rooftops to help estimate installation costs.
But while solar system sales may be a competitive space, Llorens said there's also enormous demand.
Market penetration for solar today is a tiny fraction of one percent, he said, but over time, electricity continues to get more expensive, and solar continues to get less expensive. So the penetration could reach a gigantic level.