Solar leasing model hits small wind sector

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Richard Heap
January 11, 2016
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Solar leasing model hits small wind sector

US small wind business United Wind last week secured $200m backing from Canadian investment firm Forum Equity Partners. This is the largest deal of its kind in a distributed wind company and, says United, is set to make small turbines mainstream.

United Wind chief executive Russell Tencer says there is a strong precedent for its business model, which is similar to the leasing idea behind companies such as SolarCity and Sunrun. This leasing model has led to major growth in the US small solar market.

Here is the idea. United Wind agrees a 20-year deal with a homeowner or small business owner to install an up-to-100kW on their property. The customer does not pay the up-front cost of installing the turbine, but does then pay a regular fee to United over the lifespan of the deal. The customer then gets between 50% and 100% of their property’s energy need covered by the turbine, and the saving they make mitigates the cost of the lease payment.

In theory, everyone wins. The customer gets cheaper energy for 20 years and United gets a strong long-term income stream.

The problem is that this requires a lot of investment up-front from United to buy and install the technology, and that is where Forum Equity comes in. The Forum investment should allow United to install a further 1,000 projects and secure first-mover advantage in what Tencer expects to be a multi-billion-dollar market.

And Forum will also have confidence in the track record of the company that it is investing in. United Wind has only done 26 projects since it was set up in 2013, but it was set up by small turbines manufacturer Talco, which was founded in 2000, and Wind Analytics, which has been around since 2009. It also secured $13.5m backing from New York’s Green Bank and US banking group Bancorp two months ago, which is a strong show of support.

But this investment only really makes sense if United achieves the growth it wants quickly. Forum will want significant growth over the next five years so it can make a profitable exit. It is not investing its $200m now for lease payments over the medium- to long-term.

In this regard, though, we are actually relatively positive.

United Wind is based in New York and targeting the US northeast and midwest US, so it does not look to be stretching itself too thin.

It is starting by focusing on farms and rural homes, where property owners should be keen on off-grid solutions and not beset by neighbours who hate wind turbines.

And, fundamentally, the idea look like it makes good sense. The up-front cost of installing a wind turbine — or, indeed, solar panels — can be too expensive for a homeowner or small business owner with other financial priorities, and United’s proposition removes that cost. The leasing model helped make small solar mainstream and it can do so with wind too.

The big challenge to United’s growth comes not from the initial idea, but the fact that it will not be able to keep the idea to itself. Rivals with similar propositions will emerge in the next few months, and United needs to step up its expansion plans if it is to survive in any possible feeding frenzy. Growing quickly is key if United is to keep its investor happy. The $200m gives it a great platform.

US small wind business United Wind last week secured $200m backing from Canadian investment firm Forum Equity Partners. This is the largest deal of its kind in a distributed wind company and, says United, is set to make small turbines mainstream.

United Wind chief executive Russell Tencer says there is a strong precedent for its business model, which is similar to the leasing idea behind companies such as SolarCity and Sunrun. This leasing model has led to major growth in the US small solar market.

Here is the idea. United Wind agrees a 20-year deal with a homeowner or small business owner to install an up-to-100kW on their property. The customer does not pay the up-front cost of installing the turbine, but does then pay a regular fee to United over the lifespan of the deal. The customer then gets between 50% and 100% of their property’s energy need covered by the turbine, and the saving they make mitigates the cost of the lease payment.

In theory, everyone wins. The customer gets cheaper energy for 20 years and United gets a strong long-term income stream.

The problem is that this requires a lot of investment up-front from United to buy and install the technology, and that is where Forum Equity comes in. The Forum investment should allow United to install a further 1,000 projects and secure first-mover advantage in what Tencer expects to be a multi-billion-dollar market.

And Forum will also have confidence in the track record of the company that it is investing in. United Wind has only done 26 projects since it was set up in 2013, but it was set up by small turbines manufacturer Talco, which was founded in 2000, and Wind Analytics, which has been around since 2009. It also secured $13.5m backing from New York’s Green Bank and US banking group Bancorp two months ago, which is a strong show of support.

But this investment only really makes sense if United achieves the growth it wants quickly. Forum will want significant growth over the next five years so it can make a profitable exit. It is not investing its $200m now for lease payments over the medium- to long-term.

In this regard, though, we are actually relatively positive.

United Wind is based in New York and targeting the US northeast and midwest US, so it does not look to be stretching itself too thin.

It is starting by focusing on farms and rural homes, where property owners should be keen on off-grid solutions and not beset by neighbours who hate wind turbines.

And, fundamentally, the idea look like it makes good sense. The up-front cost of installing a wind turbine — or, indeed, solar panels — can be too expensive for a homeowner or small business owner with other financial priorities, and United’s proposition removes that cost. The leasing model helped make small solar mainstream and it can do so with wind too.

The big challenge to United’s growth comes not from the initial idea, but the fact that it will not be able to keep the idea to itself. Rivals with similar propositions will emerge in the next few months, and United needs to step up its expansion plans if it is to survive in any possible feeding frenzy. Growing quickly is key if United is to keep its investor happy. The $200m gives it a great platform.

US small wind business United Wind last week secured $200m backing from Canadian investment firm Forum Equity Partners. This is the largest deal of its kind in a distributed wind company and, says United, is set to make small turbines mainstream.

United Wind chief executive Russell Tencer says there is a strong precedent for its business model, which is similar to the leasing idea behind companies such as SolarCity and Sunrun. This leasing model has led to major growth in the US small solar market.

Here is the idea. United Wind agrees a 20-year deal with a homeowner or small business owner to install an up-to-100kW on their property. The customer does not pay the up-front cost of installing the turbine, but does then pay a regular fee to United over the lifespan of the deal. The customer then gets between 50% and 100% of their property’s energy need covered by the turbine, and the saving they make mitigates the cost of the lease payment.

In theory, everyone wins. The customer gets cheaper energy for 20 years and United gets a strong long-term income stream.

The problem is that this requires a lot of investment up-front from United to buy and install the technology, and that is where Forum Equity comes in. The Forum investment should allow United to install a further 1,000 projects and secure first-mover advantage in what Tencer expects to be a multi-billion-dollar market.

And Forum will also have confidence in the track record of the company that it is investing in. United Wind has only done 26 projects since it was set up in 2013, but it was set up by small turbines manufacturer Talco, which was founded in 2000, and Wind Analytics, which has been around since 2009. It also secured $13.5m backing from New York’s Green Bank and US banking group Bancorp two months ago, which is a strong show of support.

But this investment only really makes sense if United achieves the growth it wants quickly. Forum will want significant growth over the next five years so it can make a profitable exit. It is not investing its $200m now for lease payments over the medium- to long-term.

In this regard, though, we are actually relatively positive.

United Wind is based in New York and targeting the US northeast and midwest US, so it does not look to be stretching itself too thin.

It is starting by focusing on farms and rural homes, where property owners should be keen on off-grid solutions and not beset by neighbours who hate wind turbines.

And, fundamentally, the idea look like it makes good sense. The up-front cost of installing a wind turbine — or, indeed, solar panels — can be too expensive for a homeowner or small business owner with other financial priorities, and United’s proposition removes that cost. The leasing model helped make small solar mainstream and it can do so with wind too.

The big challenge to United’s growth comes not from the initial idea, but the fact that it will not be able to keep the idea to itself. Rivals with similar propositions will emerge in the next few months, and United needs to step up its expansion plans if it is to survive in any possible feeding frenzy. Growing quickly is key if United is to keep its investor happy. The $200m gives it a great platform.

US small wind business United Wind last week secured $200m backing from Canadian investment firm Forum Equity Partners. This is the largest deal of its kind in a distributed wind company and, says United, is set to make small turbines mainstream.

United Wind chief executive Russell Tencer says there is a strong precedent for its business model, which is similar to the leasing idea behind companies such as SolarCity and Sunrun. This leasing model has led to major growth in the US small solar market.

Here is the idea. United Wind agrees a 20-year deal with a homeowner or small business owner to install an up-to-100kW on their property. The customer does not pay the up-front cost of installing the turbine, but does then pay a regular fee to United over the lifespan of the deal. The customer then gets between 50% and 100% of their property’s energy need covered by the turbine, and the saving they make mitigates the cost of the lease payment.

In theory, everyone wins. The customer gets cheaper energy for 20 years and United gets a strong long-term income stream.

The problem is that this requires a lot of investment up-front from United to buy and install the technology, and that is where Forum Equity comes in. The Forum investment should allow United to install a further 1,000 projects and secure first-mover advantage in what Tencer expects to be a multi-billion-dollar market.

And Forum will also have confidence in the track record of the company that it is investing in. United Wind has only done 26 projects since it was set up in 2013, but it was set up by small turbines manufacturer Talco, which was founded in 2000, and Wind Analytics, which has been around since 2009. It also secured $13.5m backing from New York’s Green Bank and US banking group Bancorp two months ago, which is a strong show of support.

But this investment only really makes sense if United achieves the growth it wants quickly. Forum will want significant growth over the next five years so it can make a profitable exit. It is not investing its $200m now for lease payments over the medium- to long-term.

In this regard, though, we are actually relatively positive.

United Wind is based in New York and targeting the US northeast and midwest US, so it does not look to be stretching itself too thin.

It is starting by focusing on farms and rural homes, where property owners should be keen on off-grid solutions and not beset by neighbours who hate wind turbines.

And, fundamentally, the idea look like it makes good sense. The up-front cost of installing a wind turbine — or, indeed, solar panels — can be too expensive for a homeowner or small business owner with other financial priorities, and United’s proposition removes that cost. The leasing model helped make small solar mainstream and it can do so with wind too.

The big challenge to United’s growth comes not from the initial idea, but the fact that it will not be able to keep the idea to itself. Rivals with similar propositions will emerge in the next few months, and United needs to step up its expansion plans if it is to survive in any possible feeding frenzy. Growing quickly is key if United is to keep its investor happy. The $200m gives it a great platform.

US small wind business United Wind last week secured $200m backing from Canadian investment firm Forum Equity Partners. This is the largest deal of its kind in a distributed wind company and, says United, is set to make small turbines mainstream.

United Wind chief executive Russell Tencer says there is a strong precedent for its business model, which is similar to the leasing idea behind companies such as SolarCity and Sunrun. This leasing model has led to major growth in the US small solar market.

Here is the idea. United Wind agrees a 20-year deal with a homeowner or small business owner to install an up-to-100kW on their property. The customer does not pay the up-front cost of installing the turbine, but does then pay a regular fee to United over the lifespan of the deal. The customer then gets between 50% and 100% of their property’s energy need covered by the turbine, and the saving they make mitigates the cost of the lease payment.

In theory, everyone wins. The customer gets cheaper energy for 20 years and United gets a strong long-term income stream.

The problem is that this requires a lot of investment up-front from United to buy and install the technology, and that is where Forum Equity comes in. The Forum investment should allow United to install a further 1,000 projects and secure first-mover advantage in what Tencer expects to be a multi-billion-dollar market.

And Forum will also have confidence in the track record of the company that it is investing in. United Wind has only done 26 projects since it was set up in 2013, but it was set up by small turbines manufacturer Talco, which was founded in 2000, and Wind Analytics, which has been around since 2009. It also secured $13.5m backing from New York’s Green Bank and US banking group Bancorp two months ago, which is a strong show of support.

But this investment only really makes sense if United achieves the growth it wants quickly. Forum will want significant growth over the next five years so it can make a profitable exit. It is not investing its $200m now for lease payments over the medium- to long-term.

In this regard, though, we are actually relatively positive.

United Wind is based in New York and targeting the US northeast and midwest US, so it does not look to be stretching itself too thin.

It is starting by focusing on farms and rural homes, where property owners should be keen on off-grid solutions and not beset by neighbours who hate wind turbines.

And, fundamentally, the idea look like it makes good sense. The up-front cost of installing a wind turbine — or, indeed, solar panels — can be too expensive for a homeowner or small business owner with other financial priorities, and United’s proposition removes that cost. The leasing model helped make small solar mainstream and it can do so with wind too.

The big challenge to United’s growth comes not from the initial idea, but the fact that it will not be able to keep the idea to itself. Rivals with similar propositions will emerge in the next few months, and United needs to step up its expansion plans if it is to survive in any possible feeding frenzy. Growing quickly is key if United is to keep its investor happy. The $200m gives it a great platform.

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Become a member of the 6,500-strong A Word About Wind community today, and gain access to our premium content, exclusive lead generation and investment opportunities.