(Adds CEO, analyst comments)
By Swetha Gopinath and Amrutha Gayathri
Oct 1 (Reuters) - Shares of Vivint Solar Inc rose as much as 9 percent in their market debut, as investors bet on growing demand for residential solar panel installations in the United States.
Shares of Vivint, the second-biggest installer of rooftop solar panels behind Elon Musk-backed SolarCity Corp, touched a high of $17.49, valuing the company at about $1.84 billion.
The residential solar market in the United States has grown dramatically in recent years, largely due to cheap prices for panels, particularly those made in China.
"Right now the market is less than 1 percent penetrated," Vivint Solar Chief Executive Gregory Butterfield told Reuters.
"It has got a huge growth rate, right now it is at 37 percent, and we've experienced a 336 percent growth rate."
U.S. residential solar installations grew 60 percent in 2013, reaching 791 megawatts (MW), according to renewable energy consultancy GTM Research.
Vivint, which is controlled by Blackstone Group LP, and SolarCity allow homeowners to lease solar systems rather than buying them outright, helping fuel the growth.
SolarCity controls more than a third of the U.S. residential solar market, with Vivint trailing with a 15 percent share.
"Vivint Solar has a much smaller market share than SolarCity, though from that smaller base it's recently been growing installations at a somewhat faster rate," Raymond James analyst Pavel Molchanov said.
Vivint's solar panel installations grew nearly four-fold to 10,521 in 2013, according to the company's IPO filings.
Vivint, which operates in seven states including California and New York, and Solar City also make money by feeding excess power generated by the panels into the grid.
Vivint raised about $330 million after it sold all 20.6 million shares offered at $16 per share, the low end of the expected range of $16-$18.
"I think that the successful IPO by Vivint Solar - alongside the fact that SolarCity shares are up more than seven-fold in the past two years - will encourage other players in the residential solar market to seriously consider the IPO option," Molchanov said.
Sungevity, Sunrun and Verengo Solar are some of the privately held rooftop solar panel installers.
Blackstone's stake in Vivint Solar will dilute to 78.2 percent from 97 percent before the IPO. The investment firm bought Vivint's parent company, Vivint Inc, for just over $2 billion in 2012.
Vivint Inc was founded by entrepreneur and former Mormon missionary Todd Pedersen, whose family trust now holds 1.8 percent of Vivint Solar, down from 2.2 percent.
Lehi, Utah-based Vivint Solar's revenue rose more than five-fold to $10.06 million, in the six months ended June 30 compared with a year earlier but net loss widened to $76.2 million from $22.7 million.
Goldman Sachs, BofA Merrill Lynch and Credit Suisse were the lead underwriters of the IPO.
Vivint's shares were up 4.68 percent at $16.74 in afternoon trade on the New York Stock Exchange. (Editing by Ted Kerr and Sriraj Kalluvila)