On June 29, Wells Fargo & Co. (WFC) (Analyst Report) and solar panel maker SunPower Corp. (SPWRA) (Analyst Report) entered into a collaboration to fund up to $100 million in commercial-scale solar systems for businesses and public institutions.
As per terms of the agreement, SunPower will build and maintain the solar systems, which will be financed and owned by Wells Fargo. This will allow commercial customers to buy electricity from SunPower at rates that are competitive with retail prices. This will prove to be a long-term hedge against rising power prices for customers and also enable them to take advantage of the environmental and financial benefits of solar power without any initial capital investment.
The initial projects being financed under the program include a 1.1-megawatt system for the University of California, Merced, and a 1 MW system for the Western Riverside County Regional Wastewater Authority. Both projects are expected to be completed by the end of 2009.
The deal is a step in the positive direction especially as financing for solar and other renewable power projects has diminished due to turmoil in credit markets and the global economy. Wells Fargo predicts immense opportunities over the next several years in the renewable-energy markets.
Wells Fargo has provided more than $1.75 billion in financing for renewable energy projects since 2006. This includes 27 wind projects, more than 150 commercial-scale solar projects and 1 utility-scale solar thermal project. SunPower has more than 500 large public and commercial solar power systems installed or under contract, representing more than 400 megawatts.
We maintain a Hold recommendation on the shares of Wells Fargo.
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