The critics of the Tesla-SolarCity merger were concerned of the solar company putting a strain on Tesla’s cash balance, but after the acquisition, CEO Elon Musk surprisingly said that he expects the company to contribute to its cash instead. Today, the company announced that it raised $241 million equity from its solar portfolio in a solar cash equity transaction with Sammons Renewable Energy (SRE).
The deal includes solar projects in “16 states, including 26,000 home residential systems and 19 commercial and industrial solar projects.”
Heather Kreager, Chief Executive Officer of Sammons Enterprises, said about the deal:
“SolarCity represents the caliber of company Sammons Renewable Energy looks to partner with. As Sammons Renewable Energy continues to grow in the renewable energy market, we will pursue partners that have the potential demonstrated by SolarCity in its ten-year history.”
SolarCity was an early leader in the solar leasing industry which resulted in the company owning several of its solar installations. It can give them a long-term cash flow or they can sell parts of the portfolio for quick cash infusions – like what happened here today. Unfortunately, the solar capacity wasn’t disclosed in the deal.
Under Tesla, the company will be moving to a larger share of its installations to direct purchases instead of leases, a move that was initiated just before the merger was announced and that should gradually reduce SolarCity’s upfront cash needs for new installations.
The company also recently expanded into new markets in the North East and in Florida and next year is expected to an important growth for its solar business. Once the SolarCity brand will be completely phased into Tesla, the solar sales team will be integrated with Tesla stores and new solar products should become available during the second half of the year.
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