SolarCity raises $345 million in tax equity

The U.S. distributed solar market leader’s capital markets team has raised more than $1.5 billion so far in 2016, despite a depressed stock value.

July 18, 2016 Christian Roselund

Shifting sales strategies by national residential installers like SolarCity will cause customer acquisition costs to rise in the short term - but as the market adjusts, GTM Research predicts they will fall below their previous 2013 lows.

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If there is one thing that SolarCity is really good at, it is securing capital to fund its ongoing dominance of the U.S. distributed solar market. Today that was again affirmed as the company announced a series of deals including raising $345 million in tax equity financing from four separate partners in June and July to support the deployment of more distributed solar.

In addition to the tax equity financing, SolarCity expanded its debt aggregation facility by $110 million to $760 million, and expanded its solar renewable energy credit (SREC) facility to accept five years of hedged SRECs, which it says “significantly” lowers its cost of financing for SRECs.

The great irony of these capital raises is that they come at a time when SolarCity’s stock value remains at around $25 per share, down from a high of over $57 per share in December. Even a proposal for Tesla to buy SolarCity has resulted in only minor recovery in the stock’s value which is up from a low of just over $20 per share in mid-June.

As such, SolarCity is a microcosm of what is happening in the larger solar industry, with depressed stock prices across the board. However, while the weak market capitalization of solar companies is generally leading to difficulty in securing other kinds of financing, as observed by Mercom Capital in its Q2 report on solar funding, this does not appear to be as much as a problem for SolarCity.

This may be because SolarCity is raising money for its projects, not the company itself. Project funding was identified as one key area of continued growth in Mercom Capital’s Q2 report.

And no one does this as well as SolarCity. With the deals announced today the company has raised more than $1.5 billion in project financing raised to date in 2016, with funds and facilities to finance projects with more than 30 banks and corporate partners.

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