Vivint Solar closes on $811 million in new financing (largest securitization of residential PPAs ever)

Vivint solar

Vivint Solar has closed on $811 million aggregate principal amount of debt financing comprised of two separate transactions.

The first is a capital markets issuance by its wholly-owned subsidiary, Vivint Solar Financing V, LLC, of $466 million aggregate principal amount of Solar Asset Backed Notes, Series 2018-1. The offering was upsized from the original offering size of $355 million to become the largest securitization of residential solar power purchase agreements and leases to date. Credit Suisse Securities (USA) LLC and Citigroup Global Markets, Inc. acted as joint bookrunners and co-structuring agents and Merrill Lynch, Pierce, Fenner & Smith Incorporated, Deutsche Bank Securities Inc. and SunTrust Robinson Humphrey, Inc. acted as co-managers for the issuance of the Series 2018-1 Notes.

In addition, Vivint Solar Financing IV, LLC issued, in a private placement, $345 million aggregate principal amount of Solar Asset Backed Notes, Series 2018-2. Credit Suisse was the sole arranger of the private placement of the Series 2018-2 Notes.

RELATED: Solar ownership passed leasing in 2017: Here are three reasons why

The proceeds from these two financings will be used to repay in full, or reduce the outstanding balance of, certain existing debt facilities of Vivint Solar, Inc. and its subsidiaries and for general corporate purposes. Overall these transactions lower Vivint Solar, Inc.’s blended total credit spreads by approximately 160 basis points.

The Series 2018-1 Class A Notes will have an interest rate of 4.73 percent and an anticipated repayment date of October 30, 2028. The Series 2018-1 Class B Notes will have an interest rate of 7.37 percent and an anticipated repayment date of October 30, 2028.

Vivint Solar Financing IV, LLC entered into an interest rate swap concurrent with issuance of the Series 2018-2 Notes that results in an implied all-in interest rate of approximately 5.95 percent. The term of each of the separate financings was structured to exceed the expected “flip” date of the underlying project tax equity funds.

“We are pleased to announce this new milestone in the evolution of our financing strategy, which optimizes and simplifies our term debt structure while allowing us to repay more expensive outstanding loans, increase advance rates, lock in attractive fixed borrowing rates and create incremental liquidity for the business,” said Chief Commercial Officer and Head of Capital Markets Thomas Plagemann. “We appreciate our investors’ continued support and commitment to accelerating solar power adoption.”

On a combined basis the financings provide back-leverage financing for a portfolio of 16 tax equity funds and one wholly owned subsidiary that own 575 megawatts and over 86,000 residential solar energy systems.

— Solar Builder magazine

Vivint Solar sued by New Mexico attorney general, claiming its PPAs ‘cloud titles’

New Mexico sues Vivint Solar

New Mexico Attorney General Hector Balderas took aim at Vivint Solar, Inc. in a lawsuit filed last week, claiming “unfair and unconscionable business practices, including clouding titles to consumers’ homes, fraud and racketeering in connection with its residential solar power purchase agreements and solar equipment.” A bold claim to be sure, and one Vivint Solar is obviously refuting.

In his announcement of the lawsuit, Balderas says his investigation learned of hundreds of clouded titles and thousands of Vivint customers in New Mexico. The complaint alleges that Vivint binds New Mexico consumers into 20-year contracts that require consumers to purchase the electricity generated by a solar system placed on their homes at rates that increase by over 72% during the 20 years. The complaint further alleges that Vivint deploys door-to-door sales managers to engage in high pressure sales techniques and procedures designed to mislead consumers into believing that these 20-year contracts will save them substantial amounts of money.

Vivint Solar disagrees and sees the statements made in the press release we quoted above are misleading (and actually do not even accurately describe the allegations in the lawsuit itself). Here is Vivint Solar’s response:

To be clear, Vivint Solar does not, has not, will not and cannot ever jeopardize its customers’ home ownership. Vivint Solar does not take a lien on its customers’ homes under its Power Purchase Agreements (PPAs) or Solar System Lease Agreements. A PPA is commonly used throughout the residential solar industry as a means of providing consumers with access to clean, affordable energy with no upfront investment by the customer; in exchange, the customer agrees to pay for all energy produced by the solar energy system.

Vivint Solar’s PPA relationships with New Mexico customers and throughout the country are no different. Under a PPA, Vivint Solar designs, purchases equipment for and installs a solar energy system on the customer’s home at no initial cost to the customer. Our customers purchase the energy produced by the system on their home during the term of the PPA, often at a discounted price to the utility. Vivint Solar records a notice in the county property records to disclose the fact that it owns the solar energy system. Vivint Solar does not record a lien on the customer’s home.

The attorney general’s office is well aware of this fact, and the press release headline that Vivint Solar is “jeopardizing home ownership” for customers is misleading and is not even an allegation in the lawsuit.

In the event that customers with a PPA refinance or sell their homes, Vivint Solar regularly works with customers and their financial institutions to make sure that there is no confusion about the scope of Vivint Solar’s interest. We care about our customers, and the last thing we want to do is impede a customer’s refinancing or sale of their property.

We look forward to defending ourselves in the court action.

— Solar Builder magazine

GTM: Sunrun tops SolarCity as lease sales leader, and more residential solar sales stats

Sunrun logo

2017 isn’t quite the banner year for solar that 2016 was. Aside from the trade case drama, it has also been a tumultuous year for the big names in the residential solar space. Three of the largest installers, including NRG Home Solar, Sungevity and Direct Energy Solar, have gone bankrupt or exited the residential sector. Since struggling SolarCity was acquired by Tesla, its residential business has dwindled. But Sunrun, who has seen moderate and consistent deployment growth over the last few years, has worked to fill the gap and serves as a prime example that struggles in the residential solar industry may stem from company-specific failings rather than industry-wide trends. GTM Research saw this coming, and relayed the following stats on the residential solar sector.

sunrun solar city leases

As a residential lease and PPA provider, Q3 earnings presentations indicate that Sunrun has already surpassed SolarCity based on capacity financed so far in 2017. Through the first half of the year, Sunrun narrowly missed the top spot in the TPO market with 27% market share, just behind SolarCity’s 31% share and up considerably from its 18% share in 2016. That difference of 4% market share between SolarCity and Sunrun equated to just 19 MW over two quarters. And in Q3, Sunrun financed 80 MW of systems, while SolarCity financed no more than 59 MW (a ceiling, as some of SolarCity’s systems were from its commercial business), a difference in Sunrun’s favor of more than 20 MW.

Of course, there are other ways to look at the market outside of who is financing systems. Much of SolarCity’s fall as a top residential financier has been due to its deliberate pivot away from TPO financing in order to increase its cash position. Today, nearly half of SolarCity’s systems are sold for cash or loans, and this pivot is inextricably linked to loan provider Mosaic’s prominent position in the loan market.

But looking at the residential market by total deployments (including leases, PPAs, loans and cash sales), GTM says Sunrun likely surpassed SolarCity as the leader in the space for the third quarter of 2017. According to the U.S. Residential Solar Finance Update, SolarCity deployed 233 MW of residential solar in H1 2017, Sunrun deployed 148 MW, and Vivint Solar deployed 93 MW. Yet in Q3 2017, these companies deployed 109 MW, 90 MW, and 47 MW, respectively (SolarCity’s 109 MW includes its commercial business).

So, if 18% or more of SolarCity’s Q3 installations were in its commercial business (which is reasonable given SolarCity’s historic channel mix), then Sunrun would have narrowly out-installed SolarCity in the quarter.

New sales channels and finance offerings

sunrun solar city

Both SolarCity and Vivint have endured high customer acquisition costs as mature markets have become oversaturated, and the companies have been forced to scale back operations in unprofitable markets. Specifically, SolarCity has dropped its door to door sales channel and instead is focusing on acquiring customers through digital leads. Vivint Solar, which has traditionally relied primarily on door to door sales, has added retail sales to its mix. And while these customer acquisition strategy changes are aimed to bring costs down in the long term, the slow-moving transition to these new strategies has had a short term effect of increasing costs and decreasing sales.

Equally important, both SolarCity and Vivint Solar have made concerted efforts to increase cash and loans sales as a portion of their product mixes.

While the companies make better margins off their TPO products, years of selling leases and PPAs (where the companies receive payment from the customer over a 20 year term) have left both companies in dire need of cash in the near term. Cash and loan sales allow the installers to realize immediate payment for systems they install. But even this change comes at a cost. SolarCity and Vivint Solar employ salespeople who have been selling leases and PPAs for more than 10 and 5 years, respectively. The transition to selling loans has been difficult on sales teams that are forced to change their long-honed pitches, contributing to the sales declines by these companies.

But as nearly every other large national installation company has struggled to grow this year, Sunrun is a standout as its growth has outpaced the market. Unlike its largest competitors, Sunrun has seen customer acquisition costs come down in recent quarters. And unlike SolarCity and Vivint Solar, Sunrun services the market both through its direct installation business as well as with Sunrun leases and PPAs delivered through its dealer network. By utilizing a dealer network to deploy systems, Sunrun is able to grow as the long tail of installers in its network grow as well. And while not all long tail installers are growing, Sunrun’s stringent vetting of installer partners weeds out the weaker installation companies who are more likely to go in and out of business with market boom and bust cycles.

Fact: People want solar energy. Here are some stats on why

Is the residential solar financier shakeup here to stay?

As SolarCity and Vivint Solar have deliberately scaled back operations and moved away from employing a strictly vertically-integrated installer and financier model, Sunrun has jumped on the opportunity. Unlike its competitors, Sunrun continues to primarily sell TPO systems through its direct and installer network businesses.

But recent success for Sunrun does not guarantee continued success. While Sunrun is now the leading TPO financier in the residential solar market, questions remain as to the size of that addressable market. As the residential market grows into the future, GTM Research expects the TPO market to stay relatively flat through 2022, putting a ceiling on the market that Sunrun can address. The current transition of the market away from TPO, which, according to GTM Research, will make up just 37% of the residential market in 2017 as compared to 53% in 2016, is primarily due to what leading installers are choosing to sell.

But there is downside risk to the size of the addressable TPO market. As residential system costs continue to decline, consumer-driven demand for TPO financing could become a prevailing force squeezing that market, leaving Sunrun behind the curve. There is certainly ample opportunity for Sunrun to increase its market share with its leases and PPAs, though the company has little room for error in a market with a low ceiling.

— Solar Builder magazine

Vivint Solar expands residential solar services into Delaware

Vivint solar

Vivint Solar, a full-service residential solar provider, has expanded availability of its affordable solar energy systems into Delaware. Following this expansion, Vivint Solar now operates in 21 states.

Delaware’s renewables portfolio standard (RPS) targets to achieve 25 percent of its power from renewables by 2025, with 3.5 percent required from solar.

Delaware residents will be able to purchase a system from Vivint Solar outright or finance the purchase with monthly payments through one of the institutions Vivint Solar has relationships with, or through their preferred lender.

As part of each sale, Vivint Solar designs and installs the system, allowing customers to enjoy the benefits of affordable, renewable solar energy. Vivint Solar has deep installation expertise, having completed over 113,000 installations throughout the United States.

Vivint Solar has expanded into seven additional states in 2017 and operates in 21 states in total: Arizona, California, Colorado, Connecticut, Delaware, Florida, Hawaii, Maryland, Massachusetts, Nevada, New Hampshire, New Jersey, New Mexico, New York, Pennsylvania, Rhode Island, South Carolina, Texas, Utah, Vermont and Virginia.

Vivint Solar signs deal with ChargePoint to offer EV charging solution

— Solar Builder magazine

Vivint Solar signs deal with ChargePoint to offer EV charging solution

Vivint Solar announced a strategic agreement with ChargePoint, the world’s largest electric vehicle (EV) charging network, to offer ChargePoint Home charging solutions and custom installations directly to residential customers. This is only a few months after Vivint’s deal with Mercedes-Benz.

Vivint Solar will work with ChargePoint and other strategic collaborators to provide Fully Integrated Solar, the industry’s most comprehensive residential product suite featuring a solar energy system, EV charger, home battery and smart home technology for intelligent energy management. By leveraging best-in-class energy technologies, Fully Integrated Solar from Vivint Solar enables consumers to build their own clean-energy ecosystems at home.

Vivint solar

Vivint Solar is making a move to be the national residential solar provider that offers rooftop solar customers a one-stop shop. Compatible with any EV, ChargePoint Home brings innovation to the home garage, offering the smartest, smallest and most advanced home charging solution for EV drivers. The first and only home charger with ENERGY STAR certification, ChargePoint Home charges EVs up to six times faster than a standard 110V outlet, delivering up to 25 miles of Range Per Hour and using 40 percent less energy than a standard EV charger when not charging. ChargePoint Home features a compact, slim design and is easy to manage with an app that enables drivers to schedule charging, start charging remotely and track energy usage and all charging in one place.

When EV drivers need to charge away from home, they can count on more than 40,000 ChargePoint charging spots across North America. ChargePoint is the only charging company that offers a suite of solutions to serve EV drivers everywhere they go: at home, at work, around town and on a trip.

 

Vivint Solar will offer the ChargePoint EV solution directly to homeowners in select markets in California. Customers will be able to buy the complete home solar solution – or customize a package based on their needs – through Vivint Solar’s personal sales representatives.

— Solar Builder magazine