Goldman Sachs sees a transformational moment in renewables and plans to invest in excess of $40 billion by 2021. The motivation for Goldman is to create a return on the capital they invest for their firm and clients, but where will it be invested and how can the capital be to your benefit?
Goldman and peer banks are not new to solar investment. The top banks all have been very active investing in solar, a recent sample includes: Goldman Sachs ($500mm to SolarCity), US Bank and JP Morgan ($630mm to Sunrun), Banc of America ($220mm to SunPower), and Morgan Stanley ($300mm to Clean Power Finance).
This sample of capital was announced for project funds, much of which is going to the large expansion of the residential solar leasing market but these and many other banks are also looking to deploy capital into solar in every market segment. Every day, new capital is entering the solar space, looking for the ‘elusive’ good projects in residential, commercial and utility market segments. With all of this new capital coming into solar, much of it looking to deploy money in large funds within a set timeframe, solar companies are pushing hard to satisfy. This requirement to deploy capital rapidly is spawning the rise of solar startups that make the solar development and financing processes cheaper and faster.
Just recently, SolarCity and Vivint have acquired solar companies to make their capital deployment processes more efficient. Since the start of the year, Mercatus has closed its Series A Venture round to make the deal sourcing and due diligence process faster while requiring less manpower. Making solar professionals more efficient is also the goal of startups like Folsom Labs, which launched a few weeks ago with their product Helioscope. This web based software makes creating a solar layout an easy task which any business development professional can complete within minutes. Innovation in solar continues to center about increasing throughput to make the process more efficient in deployment capital.
While most of the announced big bank money will go to a relative few companies, many market participants will benefit financially from the upward pull. Any innovation, that increases the speed of system deployment and/or lowers the costs per watt, will see interest at every stage of their growth. VCs are becoming much more active in early stage solar startups. Notable VC, Rob Day from Black Coral, tweeted, “Cleantech recruiters working overtime. LPs getting back into the sector. If the economy holds up, 2014 will be a great year for cleantech.” The Department of Energy SunShot Incubator Program also picked up some pace this year, with Round 8 awarding 16 companies the prestigious award.
When large amounts of project capital make its way into the solar market and large companies continue to acquire companies, the hype becomes a noteworthy trend. Smart ideas that enter the market with efficient use of capital get traction because the market will use every advantage possible to take part of this moment seen in solar today. Goldman Sachs and other banks are stating publicly what 140,000 solar market participants already know, solar is growing and will continue to expand. There has never been a better time to execute on your idea for making solar development and financing more efficient, take advantage of this “transformational moment.”
Yann Brandt publishes Solar Wake Up (solarwakeup.com), a daily rundown of top stories in the solar industry. He can be found on Twitter @yannbrandt