Two solar project developers this week raised funds to install commercial and utility scale projects from a somewhat unlikely source: venture capital firms.

Although they are addressing different customers, both companies are in the business of renewable energy project development, where they build, own, and then maintain solar installations.That model is typically used for non-residential solar because third-party financing makes investment far more attractive to prospective customers such as businesses and utilities.

Tioga Energy provides power purchase agreements in which the customer doesn’t have to pay the upfront cost of the solar panels. Instead, it purchases the electricity generated by the panels from Tioga, which finances the installation and manages ongoing operation.

Financing renewable energy projects is typically done by banks or companies specialized in project financing, but that source of money has dried up in the economic downturn. Venture capitalists, meanwhile, have typically stayed clear of project finance because they seek bigger financial returns by investing in technology or business model innovations.

But General Catalyst is starting to look at project development companies as part of its mix of investments, said investor Bilal Zuberi in his blog. “Strong execution, plus control over a scarce resource, allows a developer to not just create value from projects on the ground but also from future pipeline of projects,” he said.

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