A SolarZero install. Photo / File
solarZero, a firm that installs home solar power for no money upfront, has sold to US giant BlackRock.
The deal is subject to Overseas Investment Office approval.
The Herald understands the purchase price, which has not been disclosed, is close to the OIO's $100m threshold.
Charlie Reid, the co-head of BlackRock's Asia-Pacific Climate Infrastructure unit, told the Herald that on top of the purchase price, his firm would invest around $100m over the next three years - and up to $1 billion over the next seven to 10 - to accelerate solarZero's expansion in New Zealand plus possible expansion across the Tasman and around Asia-Pacific over the next three years.
solarZero offers no-money-upfront solar installations, in part bankrolled by a Crown agency (more on which below). That's a key selling point given an installation can cost $25,000 or more. Instead, a household pays a fixed monthly fee for 20 years, with Ecotricity and other grid power companies providing top-ups where necessary at capped rates.
Under its monthly fee setup the firm retains ownership of the rooftop panels, Panasonic batteries, and smart management systems installed at a customer's property. It provides real-time monitoring and maintenance. And helps consumers to trade on energy markets if they have surplus power to sell back to the grid.
solarZero claims its "Netflix for your roof" subscription approach will save the average home $230 per month on its power bill.
Some 9000 households are onboard and working with 45 installation companies, solarZero says it's adding customers at the rate of one every 35 minutes. It claims 40 per cent market share.
The firm was founded in 2008 by Andrew Booth, who had been involved in the industry since the 1970s, originally from a base in Christchurch. Booth tapped Sir Stephen Tindall for funds to rollup three solar firms into a nationwide operation (previously known as SolarCity).
Six years later, Wellington's Pencarrow Private Equity came on board as solarZero's second major investor (ahead of the BlackRock deal, Pencarrow was solarZero's largest single shareholder, with a 37 per cent stake, followed by Sir Stephen's K1W1 on 19 per cent and Booth on 5 per cent. Pencarrow was also a backer of Christchurch geologic software company Seequent, sold to Nasdaq-listed Bentley Systems in a $1.45b deal last year).
solarZero has also received backing from two Crown agencies.
One is the Energy Efficiency and Conservation Authority (EECA), which chipped in a modest $33,500 to help the firm develop technology for smart EV charging.
The other is NZ Green Investment Finance (NZ GIF), created by the Government in 2019 to help fund initiatives that support New Zealand's goal of transitioning to a net-zero-emissions economy by 2050.
Last November, NZ GIF provided solarZero with a $40 million debt facility to fund commercial-scale solar installations, which came on top of an earlier $10m facility for financing residential solar.
The NZ GIF credit line completes a debt facility from Westpac. The bank won the Business Institutional Banking Innovation category at the INFINZ Awards 2016 for its work with solarZero (then branded SolarCity) developing NZ's first solar services facility.
NZ GIF says its debt facility will help solarZero to install solar systems in enough homes to provide the virtual equivalent of a 40 megawatt power station. For context, Mercury this week said it plans to build a $115 million, 43 megawatt wind farm at Kaiwera Downs, south of Gore, that it said will be able to power 20,000 or 66,000 electric vehicles.
Booth said the terms of the debt facility would carry over to the new owner.
While there are no direct subsidies or incentives for solar power in New Zealand, NZ GIF's funding allowed solarZero to expand its zero-up-front deal at a time when national grid operator Transpower is predicting 700 per cent growth in distributed solar generation by 2030 (albeit off a low base of under 1 per cent today).
Longer trends are hard to pick in the rapidly developing green energy market. Transpower has modelled several scenarios. The most solar-friendly sees 70 per cent of New Zealand's 1.8m homes and 40 per cent of the 300,000 businesses running on solar by 2050.
NZ GIF chief executive Craig Weise said the Crown agency's $50m in financing would help solarZero and its peers create 175 jobs, and increase the potential of solarZero's "virtual power station" of solar-powered homes to help out Transpower during times the national grid is under a squeeze.
In April last year, as NZ GIF made its initial $10m in funding available, Weise said solarZero has 3500 smart batteries from its "GridforGood" fleet enrolled in Transpower's demand response programme, providing a potential 10MW of power for the short-term. The credit line provided by his agency would help expand that.
Assuming the OIO greenlights the deal - as it has for a string of techs sold offshore since the Covid outbreak - will Booth sail off into the sunset?
The founder, now 62, told the Herald he is staying on, and not for an earnout payment after two years if targets are met (the carrot that's usually dangled to keep a founder around for a period).
"There's no earnout," he said.
"We've got seven years to stop the worst impacts of climate change. And I've got grandchildren, so I intend to do everything I can to make sure that we get to that 100 per cent renewable target. So I'm staying around - even though I'm an old bugger."
Today, solarZero has 120 staff and works with 45 installers.
Reid says BlackRock will invest $100 million over the next three years - and possibly up to $1 billion over the next seven to 10 years - to speed the growth of solarZero's business in NZ, development of its battery management technology and expansion offshore.
BlackRock - the world's largest private fund manager - bought solarZero through its US$60 billion Real Assets fund.
"Our investors are long-term institutional capital; pension funds and insurers, and they're looking for two things," Reid says.
"Firstly, they're looking for attractive financial investments. Secondly they're looking for investments that will have a positive impact.
"And if you look at solarZero's business model, it gives people the opportunity to reduce their carbon footprint and enables them to reduce their electricity bills at time of escalating prices. And the technology itself helps support the grid during a time of rapid transition."
Reid adds, "NZ is widely recognised as a global leader in renewable energy and climate finance, and we are pleased to make our first investment in this market. Our move into NZ demonstrates BlackRock's commitment to invest in attractive markets as part of our broader efforts to offer a flow of addressable global climate investment opportunities for our clients. solarZero is a global pioneer."
(Although solarZero is BlackRock's first green investment here, another firm in its environmental portfolio, Australia's Jolt, has just expanded into NZ with its rollout of 500 "freemium" EV chargers that give your electric car a half-hour's worth of ad-funded fast-charging.)
"We'll be keeping the same team on the ground in New Zealand," Reid says.
“The incremental funding I would hope will enable them to go faster to reach scale and expand internationally. We’ve invested in a range of portfolio companies specifically across this region in Korea, Taiwan, Japan and Australia - and solarZero will get access to that network to help with knowledge sharing and access to those markets.”
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