New SolarCity deal will double U.S. rooftop solar power

Residential solar power provider SolarCity and the U.S. government announced a deal Wednesday to put solar panels on military housing units, a move that could double the number of rooftop solar power installed in the United States.

The complex plan calls for SolarCity to receive a $344 million Department of Energy-backed loan from financiers U.S. Renewables Group and Bank of America.

SolarCity will then use the money to put up to 160,000 rooftop solar installations on top of privately run military housing complexes at 124 military bases across 34 states.

SolarCity will own and operating the solar panels, and the companies that own the housing unites will send a monthly check to SolarCity for the electricity.

For the government, the deal allows the U.S. military to move toward its goal of getting 25% of its electricity from renewable power by 2025. It also furthers the Energy Department's goal of supporting the commercialization of solar power.

"This is the largest domestic residential rooftop solar project in history," Energy Secretary Steven Chu said in a statement announcing the deal. "It can also be a model for other large-scale rooftop solar projects that help America regain its lead in the solar industry."

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For SolarCity. the deal is a windfall. The company has installed 16,000 rooftop units since its
founding in 2006, so this program will boost its business by a factor of ten.

"This is a massive kick of momentum for the company," said Lyndon Rive, SolarCity's CEO and founder.

Rive stressed how the deal is nearly risk-free for the lenders and government, with SolarCity putting up its own money for the panels and only getting reimbursed by its lenders after each project is complete.

The SolarCity news comes after a tough spell for the industry, with solar companies Solyndra and Evergreen going belly-up in the last couple of weeks.

The Energy Department also backed Solyndra, and the Obama administration has been taking heat for both that bad loan and for focusing too heavily on green jobs that some say haven't panned out.

The SolarCity award shows that the administration is not giving up its loan guarantee program or its push for green jobs. SolarCity predicts that the initiative will create 6,000 jobs over the next five years..

Earlier this year SolarCity announced a new USD$40 million fund with backing from Citi to
finance residential solar projects in the U.S. this year.According to SolarCity, the funds will be used to provide homeowners with solar lease options, so they can install solar panels on their homes. In addition, in June 2011 Google announced it had made its largest investment in clean power to date, creating a $280 million fund for rooftop solar panel projects that will be installed by solar company SolarCity. Google’s $280 million fund could help deploy between 7,000 and 9,000 rooftop solar projects depending on the size of the systems.

Founded in 2006, SolarCity offers sales, installation, financing, operation and maintenance of rooftop solar systems in-house. In contrast to many solar installers, SolarCity offers financing
options — covering the upfront cost of the system — which can be critical for consumers and businesses given that solar electric systems are too expensive for most average buyers. SolarCity offers both leases, called SolarLeases, (a fixed monthly fee) and power purchase agreements, which require customers to pay the amount of electricity generated but not the equipment and installation costs.

SolarCity says it has over 10,000 projects completed or underway in the U.S., including more than 7,000 SolarLease customers. The company expanded to Maryland and the District of Columbia in January. It reportedly plans to offer solar leasing to a range of new states.

For the military clean energy saves lives

It was the loan guarantee from the government and SolarCity's willingness to use its own cash at
first that enabled the firm to get such a low-interest loan from commercial lenders, Rive said.

And it's the low-interest loan that's making such a large project possible. Rive said many of the projects are taking place in states with no solar power subsidies. He's using the low capital costs and subsidies from other states to offset the higher costs in states with no incentives.

"Now the solar industry has a debt model that can make distributed generation affordable on a massive scale," he said.

In a bid to nurture the clean but expensive technology, the federal government subsidizes about 30% of the costs for solar deployments. State and local incentives can cover anywhere from zero to another 30%.

The federal government spends about $12 billion a year subsidizing all forms of renewable energy production, with the vast majority of that going to the wind and ethanol industries.

Source:
CNN Money,"New SolarCity deal will double U.S. rooftop solar power", accessed September 7, 2011
Financial Feed, "Residential Solar Projects Sponsored by Google", accessed September 7, 2011
LA Times, "SolarCity to install solar on military homes, doubling residential solar", accessed September 7, 2011

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