Residential solar asset financing is alive and well as Spruce Finance closes $124 million deal

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Spruce Finance, an owner and operator of more than 200 MW of residential energy assets in the U.S., just closed $124 million in debt financing for its portfolio of solar power purchase agreements and leases with Vantage Infrastructure and Sequoia Economic Infrastructure Income Fund.

Spruce recently acquired a 27.6 MW solar asset portfolio of 3,668 residential rooftops from Greenbacker, and 31.3 MW of rooftop solar assets from Atalaya Capital. Last year, Spruce gained a $50 million equity stake from its owner HPS Investment Partners and closed on $208 million in residential solar asset financing.

The new funds will provide capital for more asset acquisitions and will be used to pay off an existing loan on its solar rooftop assets, according to a release. “Tens of thousands” of residential solar customers are under contract with Spruce subsidiary Energy Service Experts, an asset management service.

“To raise $124 million in debt financing in the midst of the Covid-19 crisis is not only a remarkable vote of confidence in Spruce from Vantage Infrastructure and Sequoia Investment Management, but also an affirmation of distributed solar as a sought-after asset class,” said Christian Fong, CEO of Spruce Finance, in a release.

“Distributed energy infrastructure investment is only increasing, in our view,” said Dolf Kohnhorst, director of Sequoia. “Well-managed residential power is a core part of 21st century’s clean energy infrastructure and grid enhancement.”

Spruce Finance was formed in 2015 with the merger of Clean Power Finance and Kilowatt Financial. Aside from Spruce’s skill at financing solar assets and defying today’s market malaise, of note is Spruce’s relatively recent strategic shift from solar loan originator in 2018 to residential solar asset owner in 2020.