PosiGen raises $100M to bring solar and efficiency upgrades to lower-income Americans

The New Orleans–based company has a clever business model that upends industry assumptions — and savvy investors want in.

(Jeff Gritchen/Digital First Media/Orange County Register via Getty Images)
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PosiGen, a provider of solar power and efficiency solutions for low- to moderate-income households, just closed a $100 million equity financing round that will enable the company to continue working toward its environmental justice mission. 

Most leading residential solar installers target affluent ZIP codes and customers with high FICO credit scores, but Thomas Neyhart, the CEO of PosiGen, doesn’t want solar to be reserved solely for the wealthy. PosiGen is looking to close the clean-energy affordability gap by selling solar and efficiency upgrades to customers that most residential solar companies would not even consider as potential sales targets.

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As a company, we believe that serving [low- and moderate-income] customers who will benefit the most from our solar-plus-energy-efficiency offerings creates a virtuous cycle of value — making a difference in the lives and communities of the families we serve, while at the same time driving customer engagement and portfolio performance,” Neyhart said in a press release.

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 told Canary Media last year. We didn’t get a lot of takers early on” — but now that’s changing. 

During its 11 years in business, PosiGen has served more than 19,000 customers, about half of them in communities of color. 

Headquartered in New Orleans, PosiGen has over 270 direct employees and supports more than 120 employees through its contractors in Connecticut, Florida, Louisiana, New Jersey and New York. We need to employ a very diverse and inclusive group of people that will help us reach a very diverse group of people,” Neyhart said. Over 65 percent of our employees are persons of color or female, which doesn’t happen that often in the solar industry.”

PosiGen’s revenue model relies on tax credits including the federal Investment Tax Credit and local subsidies. It works with banks and financial institutions to finance the installation of solar panels using tax credits; the panels are then leased to its homeowner customers.

Magnetar Capital, an investment firm with $13.5 billion in assets under management, was the lead investor in the funding round, while existing PosiGen investors, including Emerson Collective, Irradiant Partners, Activate Capital, The Builders Fund, SJF Ventures and The Kresge Foundation, also participated in the financing. 

The genius of the PosiGen model

David Kirkpatrick of SJF Ventures is an investor in PosiGen who happens to have a very relevant background: His first venture was a startup that performed efficiency and solar upgrades for customers in the low- to moderate-income category. 

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 Neyhart in an interview with Canary Media.​“Solar is sexy, but energy efficiency is where the real savings are. We’re averaging well over 3,500 kilowatt-hours of consumption reduction a year for homes. It turbocharges the savings for the customers.”

Neyhart emphasized that the efficiency upgrades also improve customers’ quality of life. 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.”

Said Kirkpatrick, There’s enough savings that after paying $50 a month to PosiGen, your utility bill drops by $80.” PosiGen has made a significant impact in its home state. When you look at [National Renewable Energy Laboratory] 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.”

PosiGen offers a standard 7.4-kilowatt rooftop solar 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 come via referrals.​“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.”

GAF Energy, a building-integrated photovoltaic roof supplier, has also been a provider of tax equity to PosiGen, one that doesn’t require high FICO scores,​“which not too many people out there would do with anyone but us,” said Neyhart.

This funding round will help support PosiGen’s recent expansion into Mississippi and Pennsylvania and its plans to start offering leases in Illinois, Missouri, Washington, D.C. and Massachusetts, in addition to supporting partner growth via PosiGen financing in California.

Eric Wesoff is the editorial director at Canary Media.