Why buy when you can lease? Over the years, makers of everything from sewing machines to SUVs have relied on this type of pay-as-you-go financing to spur sales. The entrepreneur who pioneered the no-money-down formula for rooftop solar systems now wants to help spread it to other cleantech industries.
SunEdison founder Jigar Shah believes the key to unlocking the $1 trillion a year he estimates is needed over the next decade to wean the world from fossil fuels will be millions of projects worth $1 million, rather than thousands of $1 billion ones. Shah’s latest startup, Generate Capital, is financing on-site battery storage systems from a company called Stem at about 70 locations of the hotel chain Extended Stay America. It also funded the deployment of fuel-cell-powered forklifts made by Plug Power, whose customers include Walmart, Lowe’s, and Ikea.
San Francisco-based Generate has built a portfolio of projects worth about $500 million over two years. “All of the solutions we need to combat climate change already exist in the hands of entrepreneurs,” says Shah, who started the business with two former McKinsey consultants, Matan Friedman and Scott Jacobs. “Our job is to deliver these new technologies to people who can use them.”
Generate lined up funding for a water treatment system at a plant Lagunitas Brewing is expanding in Azusa, Calif. Like all beer brewers, Lagunitas produces a lot of what’s called “high-strength waste,” which municipal water treatment plants often can’t handle. (A Lagunitas brewery in Petaluma had to truck its waste 50 miles to Oakland.) “We spent two years vetting treatment plants of every type, and nothing was scalable,” says CFO Leon Sharyon.
Then, in 2013, Lagunitas got a call…