Solar software provider Aurora Solar raised $250 million in a Series C funding round announced Monday, just about six months after it made public a $50 million Series B. The company says it’s now valued at $2 billion, an eye-popping sum among clean energy startups.
The Solar Energy Industries Association predicts that 13.4 percent of U.S. homes will have solar by 2030. But those rooftop installations currently represent just a fraction of total U.S. electricity production. Cutting the “soft costs” that account for the majority of an installation’s overall price — permitting, financing, finding customers and other non-hardware costs — has become an important focal point for the industry in its efforts to grow.
Aurora’s software uses remote imaging to design residential solar projects, aiming to simplify a labor-intensive design process. The startup's customers include some of the most recognizable names in solar, such as SunPower. In 2019 it teamed up with Google to bolster the accuracy of its design product.
The newest funding brings the startup’s total investments to more than $320 million — leagues away from peers in the solar software space, where total investment generally tops out at seven figures.
“It is a lot of money, but also the challenges that face the solar industry — particularly in reducing soft costs — are pretty massive,” said Aurora co-founder Sam Adeyemo.
Coatue, an investment firm that has also dropped money into companies such as residential solar leader Sunrun, led the funding round. Previous Aurora investors Energize Ventures, Iconiq and Fifth Wall also contributed.
Unlike most residential solar companies that saw sales decline amid the coronavirus pandemic, Aurora said in November that its business largely weathered the crisis as more installers turned to remote work processes. Rather than sending a solar installer to take measurements, assess shade on a roof and match a solar design to household load, Aurora's process allows solar companies to design a project remotely and present the design to customers with an estimated cost. Its software also now includes some sales tools, such as comparing financing options for homeowners.
The software has been used to design about 5 million solar systems, more than the total currently installed in the entire U.S. (not all of Aurora’s designed projects get built, and that figure also covers international projects designed using Aurora's platform). Adeyemo expects customers to design 2 million more projects using Aurora software in the next year.
“The pace of solar is…growing faster than before,” Adeyemo told Canary Media. “Aurora does well when the industry does well.”
Aurora didn’t provide many specifics on where it will direct the $250 million windfall, aside from increasing headcount and investing in new software offerings. But the amount suggests the startup is poised to grow alongside the Biden administration’s ambitions for clean energy. Jaimin Rangwalla, a senior managing director at Coatue, said in a release that Aurora “has the potential to unlock an inflection in [residential solar] growth through lowering soft costs.”
Non-hardware costs account for between 55 and 60 percent of the average residential installation, according to energy consultancy Wood Mackenzie. Streamlining design processes is one of several approaches to cutting those costs.
Adeyemo said Aurora plans to unveil other products in June that will reveal how the startup hopes to grow its platform to “fulfill its role in helping the industry reduce soft costs, helping solar installers from the small 'Chuck-in-a-truck,' as we call it in the solar industry, all the way to the largest publicly traded entities.”
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