SolarCity has entered into another partnership with Bank of America Merrill Lynch (BofA) to help further fund the growth of the U.S. solar industry by lowering financial barriers to smaller investors.
A new $200 million tax equity fund has been created, aimed at investors such as regional banks and smaller corporations that can perhaps only stump up around $20 million to $25 million to back solar finance packages aimed at residential and small commercial customers.
The move is intended to steer even more capital into the rooftop solar industry, inviting many smaller investors that have been unable to meet the investment threshold that has been previously required.
SolarCity and other solar finance companies have typically raised funds of around $100 million or more in order to finance their rooftop programs, often receiving monies from major corporations such as U.S. Bancorp and Google.
For SolarCity, this tax equity funds brings that investment commitment down a notch, opening up the playing field to smaller entities that in turn can finance a wider spread of residential packages. These tax equity funds allow investors to claim federal tax credits for the solar energy systems they fund under the current ITC generating returns of around 8-10%, while the homeowners receive solar systems for no upfront costs and benefit from low monthly energy bills for a period of at least 20 years.
SolarCitys chief executive, Lyndon Rive, said that the new fund will "bring many more investors and then more competition, and then that will reduce the cost [of solar]". Rive also confirmed that BofA will serve as administrator of the fund and provide all capital necessary to reach the $200 million mark.
"We will deploy that $200 million over the next year," he confirmed, "but my goal is to get that to become multiple billions".
BofA has been incredibly proactive in the funding and financing of low carbon and clean energy programs in recent years, and has dedicated $39 billion to such activities since 2007. The lender is currently midway through a 10-year, $50 billion environmental business initiative to advance low-carbon economic solutions, and has worked with SolarCity on a handful of similar initiatives in recent months, designed to proliferate the growth of solar PV throughout the U.S.
To date, SolarCity has raised $8 billion in financing for solar projects.
This content is protected by copyright and may not be reused. If you want to cooperate with us and would like to reuse some of our content, please contact: firstname.lastname@example.org.