SunRun takes $18M, advice from Accel to make solar consumer-friendly

SunRun, a company that sells rooftop-generated solar power to residential consumers for flat monthly fees (and a one-time startup cost), announced today that it raised $18 million in a second round of funding to market its services even more broadly.
Backed primarily by Accel Partners, SunRun is also implementing an aggressive web-based strategy to boost its profile and attract interest. It says Accel gave it helpful tips to grow traffic on its web site, now at more than 150,000 unique monthly visitors. It has also branched into social networking — running ads on Facebook. By making the company more searchable and making other modification to its site, Accel says it has given SunRun an edge over other companies selling residential solar, namely SolarCity and Sungevity, whose sites have drawn under 50,000 unique visitors.
In addition to expanding its market presence, SunRun says it plans to expand geographically — offering its services in ten to 14 states beyond its core of California, Massachusetts and Arizona over the next two to three years. The Northeast is particularly well-positioned for solar because electricity prices usually run so high; consumers see a substantial drop in their bills when they sign on with SunRun, the company says. That said, the company will also look at states where local subsidies and utility programs provide entree for a solar option.
It operates by partnering with local solar panel vendors who actually pick the appropriate rooftop systems and install them for customers. SunRun helps customers finance the purchase of solar systems — basically, they pay a $1,000 installation fee. It then owns, monitors and maintains the panels, and sells the electricity generated at a fixed rate via what it calls a “power purchase agreement.”
Foundation Capital joined Accel in the round. Both firms’ returns depend on whether SunRun is able to achieve wide adoption — a fairly risky gamble.
In addition to SolarCity, SunRun says it faces competition from the handful of utilities that are also starting to offer financing programs for solar systems. On top of that, it must consider consumer education — many people don’t know that purchasing solar power is an option, or exactly how to go about doing it.
Right now, SunRun says it serves about 1,000 customers — a springboard largely achieved with its $12 million first round of funding raised last June. In the fall, it scored a $105 million contract with an affiliate of US Bancorp to buy 2,000 residential solar installations; and it has partnerships with major solar installersin the states where it’s already active, including Los Gatos, Calif.-based Akeena Solar.