Residential Solar Financing gets boost with $100M Investment in SunRun
SunRun offers residential solar financing through a power purchase agreement
Residential solar financing startup SunRun has inked a $100 million financing agreement with a subsidiary of Pacific Gas & Electric (PG&E) to help homeowners install solar panels for less upfront cost than usual. The solar financing, called a power purchase agreement, will allow 3,500 homeowners in five states to use solar panels to lower their electricity fees without the typical $25,000 or higher installation investment normally required.
The concept of a power purchase agreement has been frequently used with business customers, allowing a smaller advance payment and then a monthly fee for the solar panels, in effect, financing the panels through a leasing arrangement rather than buying them. SunRun has already used its power purchase agreement concept with 4,000 customers by developing partnerships with solar installers. The new $100 million fund for residential solar financing will be available in New Jersey, Massachusetts, California, Colorado, and Arizona in 2010 and 2011.
Pacific Energy Capital, a subsidiary of PG&E, is setting up a tax equity fund so that SunRun can offer the residential solar financing to homeowners who wish to install the panels. The power purchase agreement allows homeowners to benefit from lower electric bills and the knowledge that they are helping the environment. Meanwhile, the financing companies actually own and care for the solar panels over the lease period, while receiving tax credits from the state and federal governments, and profits from selling excess electricity back to utility companies.
PG&E and SunRun will be forming a limited liability corporation called SunRun Pacific Solar to manage and divide the revenue and tax credits from their residential solar financing program, and both expect the joint venture to be profitable in addition to environmentally favorable.