PosiGen just won $27 million in venture capital to scale its solar and efficiency business aimed at low- to moderate-income households. That funding is critical to the environmental justice mission embodied by the firm's staff and clients.
While most leading residential solar installers target affluent ZIP codes and customers with high FICO credit scores, Thomas Neyhart, the CEO of PosiGen, doesn't want solar to be reserved just for the wealthy.
PosiGen bridges the clean-energy affordability gap faced by low- and moderate-income homeowners by selling solar and efficiency upgrades to tranches of customers most residential solar companies would not even consider as potential sales targets.
"When we started off, we walked into [investor] boardrooms and said, 'Our thesis is to sell solar and energy efficiency to low-income families, and we don't care about their FICO score or their debt-to-income ratio because we believe if we can save them enough money, we'll become a utility replacement that they'll want to pay,'" Neyhart said.
"We didn't get a lot of takers early on, but this year is our 10th anniversary. We've installed over 17,000 systems, and over 75 percent of those systems are in low-income census tracts."
Headquartered in New Orleans, PosiGen has over 270 direct employees and supports more than 120 employees through its contractors in Louisiana, Connecticut, New Jersey, New York and Florida.
"The genius of the PosiGen model"
Dave Kirkpatrick of SJF Ventures is an investor in PosiGen with a very relevant background — his first venture investment was a startup that did efficiency and solar upgrades for customers in the LMI category. (Other investors in the second close of this $60 million round include Activate Capital and Kayne Anderson.)
"The genius of the PosiGen model is they're basically spending a few thousand dollars for efficiency — closing up and sealing a lot of your heating and cooling leaks and other things like thermostats and LED lights — and packaging that with the sexy solar on the roof that everyone sees," said Kirkpatrick. "The efficiency drives a lot of the savings, probably more per dollar than the solar does, but all-in, you're bundling that with a 20-year flat lease."
"David's exactly right," said PosiGen CEO Neyhart in an interview with Canary Media. "Solar is sexy, but energy efficiency is where the real savings is. We're averaging well over 3,500 kilowatt-hours of consumption reduction a year per for homes. It turbocharges the savings for the customers."
"There's enough savings so that after paying 50 bucks a month to PosiGen, your utility bill drops by 80 bucks," said Kirkpatrick, adding:
"When you look at NREL data and penetration by incomes, Louisiana has a lot more low-income solar than any other state proportionally, and it's all because of this one company."
Any size solar system — as long as it's 8 kilowatts
PosiGen offers a standard 7.4-kilowatt system for homeowners in the Northeast and an 8-kilowatt system in Louisiana. The easily replicable design reduces construction and permitting time.
More than half of PosiGen's customers are identified via referrals from satisfied clients. "We spend less than anybody else to acquire a customer," Neyhart said. PosiGen spends "about 20 percent of the average cost of acquisition of any of our industry peers. If you have a good value proposition, you shouldn't be paying so much to acquire customers."
PosiGen has raised a $90 million credit facility in conjunction with the Connecticut Green Bank, which is "another example of how the Green Bank attracts more private capital where it’s needed most," CEO Bryan Garcia said. GAF Energy provides tax equity that doesn't require a FICO score, "which not too many people out there would do with anyone but us," he said.
Community success stories
Neyhart detailed a few of PosiGen's customer and employee success stories.
"Susan Young was the youngest of six sisters that emigrated from Jamaica. She had to make her own way; she's a single mother with two kids. She tried to get solar from SolarCity but they turned her down because of her FICO score and income. She called us up. We went out, did the work, and her savings were off the chart since she lived in an older house with a high fuel bill. She saw that we were hiring a salesperson, and she walked in our front door and said, 'I've never sold anything in my life, but I think if I tell people my story, people will want to buy PosiGen.' She turned out to be a great salesperson and eventually became a senior salesperson, [then] a team lead, and now she's the community marketing manager for the state of Connecticut.
"We need to employ a very diverse and inclusive group of people that will help us reach a very diverse group of people. Over 65 percent of our employees are persons of color or female, which doesn't happen that often in the solar industry."
"People have been given second chances after battling addiction, people that have had a criminal past and have needed to turn their lives around. We have stories of people coming to work in entry-level positions and moving up and becoming managers, and regional managers, and directors, and community marketing directors.
"People don't think a lot about the air quality in low-income neighborhoods and communities of color, but in so many cases, they're built somewhere close to a landfill or a wastewater treatment plant or industrial park or factory. The air quality is already very poor, but then when you get to the house, you hook up that blower door, and it's supposed to be 1,800 cubic feet of air per minute and suddenly it's 5,000 or 6,000, and you realize the ductwork is leaking and the house is like a sieve — the people living there are breathing very poor air quality.
"Although solar is important, it's really the microclimate that customers feel. We can reduce the spores and mold and dust and water intrusion. People are living healthier in their homes."
The CEO said that PosiGen plans to grow its sales teams in Louisiana, Connecticut and New Jersey, and it will continue to serve some parts of New York. "We've also been talking with the city of Philadelphia; we think that there's a great opportunity for us there. We're talking to Illinois and Nevada. California is on the list, but it's not like we're going to Silicon Valley — we'll be going to Compton."
(Article image courtesy of PosiGen)
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