PG&E Finances $100 Million for Solar Leasing Company SunRun
Financing is a hobby usually left to banks, or in the case of research and development, to venture capital firms, but it is rarely an endeavor taken on by utilities. However, that is exactly what Pacific Gas & Electric (PG&E) is doing to facilitate the installation of 3,500 home solar power systems. The Bay Area utility is giving $100 million to SunRun Inc., which will install the solar systems over five states.
SunRun is part of a growing movement toward leasing in the home solar power sector. Rather than the homeowner paying the upfront costs, in a solar leasing scheme, a company, in this case SunRun (with the help of PG&E), pays for and installs the system. The homeowner then leases it from the solar company at a monthly premium lower than their average monthly utility bill.
The homeowners save money immediately through solar power, while the leasing company collects payments and benefits from all relevant rebates and tax incentives. The lease holder retains ownership of the solar panels. A contract is signed with the homeowners, locking in the fixed monthly payments for a set term, usually 15 years. At the end of this term, the lease can either be renewed, with a restructured contract, or choose to have the panels removed.
PG&E’s $100 million is being distributed through its subsidiary, Pacific Energy Capital. Lessee payments from SunRun systems financed with PG&E money will be split between SunRun and the subsidiary. Pacific Energy Capital will also receive an investment tax credit from the federal government for funding. PG&E will reportedly make a profit on the financing, although the projected amount has not been released.
This is actually the second time that PG&E has entered into this type of financing deal. Earlier this year, the company inked a deal to give $60 million to SolarCity, another Bay Area-based solar installer that offers solar leases.
SunRun systems financed by PG&E will be installed by the end of 2011 in Arizona, California, Colorado, Massachusetts and New Jersey.
Source: San Francisco Chronicle
Posted on June 25th in Solar News by Dan.