BACC Editor on Wednesday, 06 July 2011 16:58

Private Sector Heavyweights Invest Big in Solar

The private sector has been getting serious about solar investment. Bank of America, Merrill Lynch, Prologis, and NRG just announced a partnership that aims to finance up to $2.6 billion of commercial and industrial rooftop solar arrays. Once finalized, the partnership will represent the largest distributed solar deal in history.

Through this distributed solar project, more than 10,000 full-year jobs will be generated across 28 states. After completion, these installations are estimated to supply about 733 MW of distributed solar energy, which would provide renewable energy to power roughly 100,000 homes.

Bank of America, a major partner of the Bay Area Climate Collaborative, will serve as the main financial backer of this project, supported by a US Department of Energy loan guarantee and $1.4 billion loan commitment. Prologis, an industrial real-estate owner, will serve as a developer and program sponsor by providing access to rooftops while making an equity investment in the project. NRG, one of the nation’s largest utility companies, is funding the first phase of the project as well as providing development resources. Together, they hope to produce large amounts of clean energy while generating thousands of jobs across the states.

This news follows closely on the heels of a similar announcement from Google, which is targeting residential solar. Further solidifying its emergence as a major, VC-level investor in clean power projects, Google has recently announced that it is creating a $280 million fund for rooftop solar panel projects to be installed by SolarCity, a sponsor of the Bay Area Climate Collaborative’s SunShares outreach program. Having previously invested in large-scale wind and solar thermal projects, this is Google’s first foray into residential and distributed solar.

SolarCity has raised at least a dozen funds similar to the Google one, but it usually raises these funds from banks like Citi and U.S. Bancorp (and has also worked with utility PG&E). Lyndon Rive, SolarCity CEO, said the biggest hurdle to getting its solar projects deployed is raising project financing.

According to the California solar Initiative (CSI), there are approximately 48,000 residential solar systems currently installed in the state. The Google SolarCity investment could have significant impacts on the number of installed residential solar in California and the nation.

Google’s $280 million fund could help deploy between 7,000 and 9,000 rooftop solar projects depending on the size of the systems, said Rive, in an interview this week. Because there are so few solar rooftop projects in the U.S. right now, the fund could theoretically help deploy one in 10 solar rooftop projects over the next two years, said Google Director of Green Business Operations Rick Needham.

Private sector investments of this kind can play a significant role in helping solar providers get projects deployed. Lyndon Rive, the CEO of SolarCity, says that “Google is setting an example that other leading American companies can follow.”