Solar Company Enpal Enters the Fintech Business

The billion-dollar solar start-up Enpal has founded its own fintech subsidiary to find new growth channels. A market that is currently attracting several financial start-ups. What is behind the boom?

The Enpal cafeteria is packed when company boss Mario Kohle jumps onto the stage with a broad grin. With confetti cannons, electric basses and great applause, he will announce a new product on that Monday at the end of March: “EasyFlex Financing”, an installment loan offer for photovoltaic systems and heat pumps.

The solar loan is the first product of the company’s own fintech subsidiary EFS (short for Enpal Financial Services). Enpal had already quietly founded the financial services provider in June 2023 and hired “Chief Banking Officer” Thom Rasser to manage it. The Dutchman was previously chief financial officer at Berlin-based Solarisbank. With the EFS installment loan, homeowners can finance their new solar system over 25 years with a capped interest rate of a maximum of 5.99 percent. Around 6,000 customers have already opted for this.

With this step into the financing business, Enpal is trying to open up a new market. The tradesmen with whom Enpal normally competes in the sale of solar panels and heat pumps will in future at least be able to use a loan from the company. But the Berlin-based provider has to assert itself against new competitors in this market. For example, against the German-Swedish financial start-up Cloover, which recently raised around 114 million dollars to expand its own financing solution. Bullfinch is the name of another fintech.

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Behind the Enpal offer is a complicated securitization program: Enpal sells claims from the sale and installation of solar systems to special purpose vehicles (so-called SPVs). These companies turn them into securities, which they sell to investors. The money that Enpal receives from this is used to pre-finance the installment loans.

“Our team has created nothing less than a new asset class in Europe,” enthuses Enpal CEO Mario Kohle. The whole thing was preceded by “years of development work” with international banks, says Kohle. His company has now raised 3.6 billion euros in financing from investors, including asset manager Blackrock, the major British bank Barclays, Bank of America and the Canadian pension fund CPP. This can also be used to fuel the new fintech product.

Small companies dominate the market

A dedicated team has been preparing the launch of EFS in recent months. The billion-dollar start-up has to look for new growth areas, as the existing solar business has become more difficult. The advantage: A large part of the market is still served by smaller solar companies and these are exactly the ones EFS wants to reach.

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Competitor Cloover assumes that the newer providers such as Enpal and Co. cover just 15 percent of the total market, with the vast majority being served by medium-sized companies and craft businesses. One of Cloover’s first customers is 4Panels, a company that installs 2,000 systems a year. It already has around 100 partners.

Enpal is also trying to reach the target group – with its “Enpal Pro” offer, it sells its own logistics network and purchasing of goods to other solar companies. Installment financing is the next step.

Venture capitalists have a mixed view of the new boom in solar fintech companies. Fast-growing solar providers such as Zolar or Enpal could quickly benefit from the model, according to investor circles. One reason is the shortage of skilled workers: “The model makes it possible to generate revenue beyond your own manpower and sales performance because you basically only offer financing and leave the rest to local companies,” says one person who has looked at the model. The providers could also use links to reach additional users in order to expand their intelligent power grids.

The concern that the craft businesses will pass their customers on to start-up competitors through external financing is not shared. The model promises the businesses more sales because it enables them to serve customers who cannot get a loan from a bank due to poor creditworthiness, for example. “Because the financial providers secure themselves with the energy performance of the customers, there is also a lower risk of default,” says one investor.

But not everyone is convinced. Pure financing providers such as Cloover or Bullfinch in particular have to constantly arrange more loans in order to be able to grow reliably. In doing so, either the partners themselves grow or new partner companies are constantly needed. The sales effort is correspondingly high. In addition, the model initially requires high external capital investments by the companies themselves in order to finance the loans. “Capital efficiency is different,” complains a partner of an early-stage VC. Accordingly, the model has been abandoned.

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(Featured image by Chelsea via Unsplash)

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