Bright raises $32M to speed up rooftop solar installation in Mexico
Bright is a startup with a straightforward but tricky goal: to make it easier for homeowners and businesses to buy and install rooftop solar in Mexico.
Now the company has an additional $31.5 million in funding to try and make that happen.
Bright is building a software and finance platform meant to change the way Mexico's homeowners and businesses get connected to solar power. The startup allows installers in the country to provide prospective rooftop-solar customers with an array of financing options at no upfront cost.
Jonah Greenberger, Bright’s CEO, told Canary that the company provides solar installers and sales entrepreneurs with workflow automation, speedy customer-eligibility assessments, and underwriting to gain access to its finance partners, including the Inter-American Development Bank.
Back in 2015 when the company was founded, Greenberger told me his goal was to process 500 rooftops by the end of that year. He saw that as a good start for a small firm about to face cultural, organizational and financial challenges. Another of the CEO’s goals was to improve his then-decent Spanish.
Eight years later, the CEO told me that Bright has helped install a total of more than 30 megawatts of distributed solar for 4,700 customers and has become Mexico’s No. 1 financier of distributed solar.
It wasn’t a direct or easy path.
“A lot of startups have this challenge — to get enough scale to attract low-cost project finance. Project financiers really want to do $50-million-plus deals, and in our early days, it was hard to get to that scale. But in the last three years, we've grown over 100 percent year-over-year,” said Greenberger, attributing the uptick to securing cost-effective project finance and automating a lot of sales and service processes, as well as the declining cost of solar. The CEO says his Spanish-speaking skills have improved too.
The Series C financing round was led by the IFU, Denmark’s state-owned fund for investing in developing countries, and a long list of notable investors including Lynn Jurich and Edward Fenster, the founders of Sunrun, JB Straubel, co-founder of Tesla and current CEO of Redwood Materials, Grupo Bimbo president Daniel Servitje, Leonardo DiCaprio, First Round Capital, Y Combinator, and “one of the biggest U.S. family offices.”
Opportunities for solar in a challenging market
Mexico would seem to be an ideal place to install distributed solar power — the country is located in one of the sunniest parts of the world and has relatively high electricity rates. Net metering, a policy that pays solar customers for excess power they export to the grid, has been in place since 2010.
The country’s installed solar capacity is over 9.7 gigawatts, 2.6 gigawatts of which is distributed solar, according to the Mexican solar industry association Asolmex. That puts Mexico in second place in Latin America behind Brazil’s 32 gigawatts and ahead of Chile’s 6+ gigawatts of solar generation capacity.
But Mexico’s policies, market structures and public acceptance of renewables have not yet caught up with the country’s rich solar resources — or the ambitions of its clean-energy advocates.
Mexico’s president is more a fan of oil and gas than solar and wind. Forbes points out that “investment in solar energy has stalled” since President Andrés Manuel López Obrador took office in 2018 and “stopped issuing permits and canceled auctions for solar projects, effectively cutting off the flow of private sector investment in solar projects.”
But despite the headwinds, Greenberger sees an opportunity in what he says is a flawed utility model in the country.
"The utility model is challenged in the U.S., but it's far more challenged in other countries,” said Greenberger. In the developing world, there's "government-run customer service," and "generation is mostly fossil fuels." He added, "If people in the U.S. struggle with their utility, then people in Mexico really struggle."
"We want to provide a utility alternative in developing nations” and be "a trusted partner that customers love,” said Greenberger.
Bright’s solar program starts out with a leased rooftop-solar system that ensures customers pay less for electricity than they would have paid otherwise — and they have the option to buy the installation at any point.
The homeowner can also cancel the subscription, and Bright will take back the system and redeploy it elsewhere. The company’s short-term leases offer the option to renew each year.
“Trust is critical,” said Greenberger. “In the U.S., you have Yelp and Google reviews, but in Mexico, it's really about who you know that's gotten solar and who you know that works at the company. Our strategy is one of partnership with installers and entrepreneurs to serve that sector.”
The startup guarantees the minimum energy production of the system, and if something goes wrong, Bright is the primary touch point for the customer — even though all systems are installed and serviced by third parties.
Greenberger said that customers are looking for a trusted name that’s used across Mexico’s large number of small installers. “There are something like 5,000 installers across Mexico, so we just partnered with them,” said the CEO.
Installation costs in Mexico are much cheaper than in the U.S. because of lower labor costs and less stringent permitting requirements. A typical 3-kilowatt installation costs approximately $1.40 per watt, for a total of about $4,200, according to the CEO. A residential solar system in the U.S. comes in at $2 to $3 per watt, according to the Center for Sustainable Energy.
“A lot of the soft costs are just taken out. We're not having to deal with a lot of homeowners associations, for instance,” said Greenberger.
The company's analytics focus is on which customers pay their bills, with a preference for higher-income clients in households with higher rates. This is the Tesla strategy: sell to the well-heeled in order to drive volume and finance future lower-cost offerings.
Ultimately, in helping to expand access to financing tools in Mexico and professionalize the solar workforce, Bright aims to legitimize residential solar in the eyes of customers and financiers. Attracting international capital to the Mexican market will continue to lower costs and expand the addressable market to solar-curious middle-income households — and commercial and industrial customers, too.
Another opportunity that Greenberger is eager to explore is the growing trend of major manufacturers moving some or all of their operations from Asia to Mexico. In 2020, Ford announced it was moving production of some vehicles from China to Mexico. Other manufacturing giants such as Apple, GM, Honda, Tesla, Foxconn, Audi and Heineken are considering or already making their move to Mexico, as well. And as more manufacturing shifts from China to Mexico, so too will the sustainability mandates of multinational corporations requiring factories powered by clean energy.
“That's a huge growing sector with big energy consumers that we're starting to serve,” Greenberger said. “We can enable them to manufacture with clean energy.”
