Wednesday, January 20, 2010, 6:55am PST | Modified: Wednesday, January 20, 2010, 9:54am
PG&E, SolarCity partner on solar
San Francisco Business Times - by Lindsay Riddell
PG&E is officially financing solar.
Under a partnership announced today, a financing arm of Northern California utility owner PG&E Corp. will provide $60 million in tax equity financing for about 1,000 solar systems installed by Foster City-based SolarCity. This is the first partnership of its kind between a utility and a solar installer.
Tax equity financing helped drive major growth in the solar industry in years past. The federal government offers a 30 percent tax credit for renewable energy projects but only companies that make a profit can use that tax credit.
Most solar companies don’t have the capital to finance projects themselves so they use tax equity partners — often banks — to essentially buy the tax credit off of them at a discount and provide capital upfront to pay for solar projects.
However, when the recession hit, few tax equity financers were profitable enough to use the tax credit, and that stalled solar projects as companies struggled to find scant available sources of capital.
Utilities had been barred from using the federal tax credit for renewable energy but were empowered to do so to finance renewable energy under new regulations passed in the federal stimulus bill in 2008.
PG&E announced in 2009 that it would develop 250 megawatts of distributed generation — solar power near transmission lines — within its service territory and bid another 250 megawatts out to the public.
PG&E is paying for the projects through its financing arm Pacific Venture Capital.
Homeowners both within PG&E’s electricity service territory and in the rest of the state, Arizona and Colorado, will have financing options including leases and power purchase agreements offered by SolarCity.
“SolarCity strongly believes solar companies and traditional energy industry players must work together if solar power is to become a mainstream source of electricity in America,” said Lyndon Rive, SolarCity’s CEO.
Started in 2006, SolarCity has 1,700 solar customers in Pacific Gas and Electric Co.’s service territory and 5,000 solar customers total.
Under a partnership announced today, a financing arm of Northern California utility owner PG&E Corp. will provide $60 million in tax equity financing for about 1,000 solar systems installed by Foster City-based SolarCity. This is the first partnership of its kind between a utility and a solar installer.
Tax equity financing helped drive major growth in the solar industry in years past. The federal government offers a 30 percent tax credit for renewable energy projects but only companies that make a profit can use that tax credit.
Most solar companies don’t have the capital to finance projects themselves so they use tax equity partners — often banks — to essentially buy the tax credit off of them at a discount and provide capital upfront to pay for solar projects.
However, when the recession hit, few tax equity financers were profitable enough to use the tax credit, and that stalled solar projects as companies struggled to find scant available sources of capital.
Utilities had been barred from using the federal tax credit for renewable energy but were empowered to do so to finance renewable energy under new regulations passed in the federal stimulus bill in 2008.
PG&E announced in 2009 that it would develop 250 megawatts of distributed generation — solar power near transmission lines — within its service territory and bid another 250 megawatts out to the public.
PG&E is paying for the projects through its financing arm Pacific Venture Capital.
Homeowners both within PG&E’s electricity service territory and in the rest of the state, Arizona and Colorado, will have financing options including leases and power purchase agreements offered by SolarCity.
“SolarCity strongly believes solar companies and traditional energy industry players must work together if solar power is to become a mainstream source of electricity in America,” said Lyndon Rive, SolarCity’s CEO.
Started in 2006, SolarCity has 1,700 solar customers in Pacific Gas and Electric Co.’s service territory and 5,000 solar customers total.
Email Lindsay Riddell at lriddell@bizjournals.com / (415) 288-4968