Y Combinator Invests in Mexican Solar

Y Combinator has had an impressive track record investing relatively small amounts of money (US$ 120,000 annually) into over 800 start-ups the past 10 years. Its list of companies to which it has granted seed money reads like of what assumedly is an alumni of premier venture capital firms: Dropbox, AirBnB, Reddit, Scribd and Disqus are just a few of Y Combinator’s success stories. Now Y Combinator’s first investment in a clean energy company could add to the US$ 30 billion in valuation this seed funder already has in its portfolio. The start-up Bright Exchange, Inc. (branded as Bright) believes it can transform solar energy in Mexico.

Bright aims to address the high costs of electricity while benefiting the environment. Utilities take too much out of Mexicans’ wallets—by some accounts electricity rates in Mexico ranks eighth highest within the 34-member Organization for Economic Co-operation and Development (OECD). Bright promises to slash those costs by 20 to 30 percent with its rooftop solar programs.

According to GreenTechMedia, Bright is going against the conventional solar rooftop installation business model by only asking homeowners for a five-year commitment for one of its systems instead of the 20 years typical within the United States. The first step for homeowners in Mexico is to qualify—so initially this program is targeting upper-middle income families.

Homeowners are required to own their homes, have a credit history and consume a relatively high rate of electricity. Because utility rates increase in Mexico precipitously after a certain threshold, homeowners could financially benefit from what Bright’s program has to offer. While the rooftop solar reads less like the power purchase agreements (PPAs) common in the U.S. and more like a subscription to a cable or internet service provider, Bright will still cover the installation and management of the system; homeowners also have the option to buy the solar rooftop installation outright.

As Mexico’s population and economy continue to expand, the country will demand more energy; and despite the country’s plentiful oil reserves, fossil fuels will not be enough to meet demand. The country’s contentious energy reform laws have not only promised to expand Mexico’s oil industry, but have also created openings for clean energy technologies including solar. The rapidly increasing cost of electricity in Mexico—8 to 10 percent annually—means solar has reached grid parity in much of the country. While solar energy capacity in Mexico is tiny at the moment, it is growing exponentially, and therein awaits opportunities for entrepreneurs such as those behind Bright.

Based in California, Leon Kaye is a business writer and strategic communications specialist. He has also been featured in The Guardian, Clean Technica, Sustainable Brands, Earth911, Inhabitat, Architect Magazine and Wired.com. When he has time, he shares his thoughts on his own site, GreenGoPost.com. Follow him on Twitter and Instagram.

Image credit: SolarGis, Thelmadatter