Tuesday, June 21, 2011 11:06:05 PM
Funding For U.S. Solar Power Projects Rising
By DONNA HOWELL, INVESTOR'S BUSINESS DAILY Posted 06:03 PM ET
More funding deals are arising for U.S. solar power projects as the nation ramps up as a solar market. But it's uncertain if more corporations are apt to jump in to provide financing as Google (GOOG) has.
Borrego Solar Systems said Tuesday U.S. Bank (USB) and Southern California's East West Bank (EWBC) are financing more than $100 million of its commercial and utility solar projects. Just last week Google announced $280 million in corporate financing for home installations by SolarCity.
Banks, and now a big business, are funding solar to diversify and boost returns in today's low interest rate environment, for what they deem a decent risk. The deals let them take a 30% tax credit for what they spend, this year as an upfront grant, plus get an income stream from projects they finance. Customers often pay on a power purchase agreement or system lease.
One Borrego Solar job outfitted the University of California, San Diego.
The more interest in funding solar the better for developers, says Bill Bush, Borrego's chief financial officer. But he doesn't see a rush of firms following Google's lead.
"I think it's a positive any time where you have more competition — as a developer, the cost of equity should go down," Bush said. "Though I think Google is probably a very different company than a lot of other places, so I don't know how repeatable that model is."
For one thing, firms getting into solar funding for the 30% tax credit would need to have enough steady profit over years to not waste it.
Borrego's more than $100 million in bank financing consists of a new $46 million round atop $56 million from the banks in recent months. SolarCity has mounted over $1.25 billion in funds since 2008, with banks, utility owners and Google.
U.S. Bank started investing in solar in 2008. It has formed funds with both SolarCity and Borrego.
"It's an attractive investment first from a yield perspective, second from a credit risk perspective — and it's good to be investing in renewable energy from a public policy standpoint," said Darren Van't Hof, U.S. Bank's director of renewable energy investments.
Banks went hunting for safe returns in the wake of the investment banking crisis and credit crunch.
"As we looked around the landscape back in 2008, there weren't that many industries that had the appeal or growth opportunities that the renewables space had," said Hank Lee, a vice president at East West Bank. "We're providing senior debt financing ... because of additional risk factors and because of the increasing complexity (of deals), we're able to get above-market returns compared to say traditional two-party investments."
http://www.investors.com/NewsAndAnalysis/Article/576015/201106211803/Banks-Boost-Funding-For-US-Solar-Power.htm
By DONNA HOWELL, INVESTOR'S BUSINESS DAILY Posted 06:03 PM ET
More funding deals are arising for U.S. solar power projects as the nation ramps up as a solar market. But it's uncertain if more corporations are apt to jump in to provide financing as Google (GOOG) has.
Borrego Solar Systems said Tuesday U.S. Bank (USB) and Southern California's East West Bank (EWBC) are financing more than $100 million of its commercial and utility solar projects. Just last week Google announced $280 million in corporate financing for home installations by SolarCity.
Banks, and now a big business, are funding solar to diversify and boost returns in today's low interest rate environment, for what they deem a decent risk. The deals let them take a 30% tax credit for what they spend, this year as an upfront grant, plus get an income stream from projects they finance. Customers often pay on a power purchase agreement or system lease.
One Borrego Solar job outfitted the University of California, San Diego.
The more interest in funding solar the better for developers, says Bill Bush, Borrego's chief financial officer. But he doesn't see a rush of firms following Google's lead.
"I think it's a positive any time where you have more competition — as a developer, the cost of equity should go down," Bush said. "Though I think Google is probably a very different company than a lot of other places, so I don't know how repeatable that model is."
For one thing, firms getting into solar funding for the 30% tax credit would need to have enough steady profit over years to not waste it.
Borrego's more than $100 million in bank financing consists of a new $46 million round atop $56 million from the banks in recent months. SolarCity has mounted over $1.25 billion in funds since 2008, with banks, utility owners and Google.
U.S. Bank started investing in solar in 2008. It has formed funds with both SolarCity and Borrego.
"It's an attractive investment first from a yield perspective, second from a credit risk perspective — and it's good to be investing in renewable energy from a public policy standpoint," said Darren Van't Hof, U.S. Bank's director of renewable energy investments.
Banks went hunting for safe returns in the wake of the investment banking crisis and credit crunch.
"As we looked around the landscape back in 2008, there weren't that many industries that had the appeal or growth opportunities that the renewables space had," said Hank Lee, a vice president at East West Bank. "We're providing senior debt financing ... because of additional risk factors and because of the increasing complexity (of deals), we're able to get above-market returns compared to say traditional two-party investments."
http://www.investors.com/NewsAndAnalysis/Article/576015/201106211803/Banks-Boost-Funding-For-US-Solar-Power.htm
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