Start-up plans insurance product to lower capital cost for solar projects
Solar fintech start-up, kWh Analytics, has secured $5m funding for its PowerLock database, which "builds actuarial models" allowing insurance companies to underwrite the risk of any sized solar project. The start-up plans to create a database combining details of more than 70,000 solar projects with kWh Analytics' risk management software using an approach similar to Experian's for credit in a bid to become a trusted third party that can offer guarantees on solar projects that lower the cost of capital. 

Solar fintech startup kWh Analytics has raised $5 million in a series A to support its new product, PowerLock, which is designed to help lower the cost of capital for the solar market.

The round was led by Anthemis Group, which primarily invests in fintech, as well as Engie New Ventures.

KWh Analytics is focused on meshing the data from more than 70,000 solar projects on its platform together with its risk management software to earn the backing of two unnamed A-rated insurance companies. It has used its database to build actuarial models that allow the insurers to underwrite the risk for solar projects of nearly any size.

The approach is similar to CoreLogic for mortgages or Experian for credit. It wants to be a trusted third party that can offer guarantees on solar projects that lower the cost of capital.

Some of the larger installers, such as SolarCity, have performance guarantees. But many smaller solar companies do not have the same sort of guarantees, and no one has a product with a third-party backing.

“This makes solar financing as boring as possible,” said Richard Matsui, CEO and founder of kWh Analytics. “The higher the cost of capital, the more the guarantee can add value.”

Matsui said the real value would likely be for distributed projects, whether residential or commercial, where there is the most uncertainty. Matsui said the product can help with utility-scale solar financing as well.

The product should ideally be enhanced as more data becomes available, especially if the U.S. Department of Energy’s Orange Button ever takes off. KWh Analytics is involved in Orange Button. It received a $1 million grant to translate original data formats into data standards built on the Orange Button specifications.

“Market data is not only one of the key drivers for efficient markets,” Yann Ranchere, partner for Anthemis Group, said in a statement. “It is also a core asset for building a new approach to solar production insurance." One of Anthemis Group’s most successful investments was The Climate Corporation, which provides risk analysis to farmers using weather and field data. It was sold to Monsanto for nearly $1 billion in 2013.

KWh Analytics is not the first firm to try to bring insurance guarantees to solar. A few years ago, insurance provider Assurant launched a similar product for production guarantee, but Matsui said it lacked the data to scale the offering.

Matsui said the product can be used by any player in the solar industry to gain better terms for a project, whether it’s an installer or a private equity group.

“I’ve seen firsthand how access to reliable, aggregated data can be transformative for markets. It has been the case for mortgages, credit cards, consumer credit and many other markets with business models based upon revenue-generating assets,” said D. Van Skilling, former CEO of Experian and chairman of CoreLogic. "It will be no different for solar.”