Sunlight Financial, a startup that provides loans for home solar systems, on Wednesday said it received a $500 million commitment from Technology Credit Union that will finance about 20,000 new rooftop installations.
The announcement, Sunlight's largest single funding commitment to date, comes as demand for residential solar is slowing in California, by far the industry's biggest market.
Homeowners signing up for solar panels are increasingly opting to own, rather than lease their systems. Under leases and power purchase agreements, homeowners pay a monthly fee for their solar energy but their systems are owned by either the installer or an investor.
Leases and PPAs were a major innovation in the solar industry, contributing to rapid growth in recent years. Recently, however, they have lost market share to loans. For the first time since 2011, ownership is expected to outpace leases this year, according to solar market research firm GTM Research.
"We're seeing increased demand for our product," Sunlight Chief Executive Matt Potere said in an interview. "Homeowners are increasingly shifting from power purchase agreements and leases to loans."
Sunlight provides loans for a range of U.S. installers, including Tesla Inc's (TSLA.O) SolarCity, which pioneered the solar lease but has said it is focusing on cash sales and loans as it prioritizes projects that generate cash upfront.
Last week, Tesla said 31 percent of its customers chose to purchase their solar systems rather than lease in the first quarter, up from 9 percent a year ago.
Sunlight offers loans with terms of 10 to 25 years, and in between. Interest rates range from 2.49 percent to 6.99 percent depending on the customer, according to Potere.
Founded in 2014, Teaneck, New Jersey-based Sunlight is backed by private equity firms Hudson Clean Energy Partners and Tiger Infrastructure Partners and venture capital firm Route 66 Ventures.
The company previously received a $50 million commitment from Technology Credit Union, which has 85,000 members in the San Francisco Bay Area, in 2015.
(Reporting by Nichola Groom; Editing by Tom Brown)