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Posts Tagged ‘U.S. Bancorp’

SolarCity_FirstSolarArray-_Coast

photo: SolarCity

When Wall Street collapsed last year so did  tax equity funds, the primary vehicle to finance renewable energy development.  But as I write in The New York Times today, investors are beginning to jump back into the game.

U.S. Bancorp has agreed to finance $100 million of solar installations in 2009 for California startup SolarCity. Investors are being lured in part by a federal stimulus package provision that lets them take a 30 percent investment tax credit for renewable energy projects as a cash grant:

The credit crunch has walloped the residential solar industry, making it hard for installers like SolarCity to tap investor funds to finance rooftop arrays for their customers.

But in a sign that the recessionary clouds are parting a bit, SolarCity on Tuesday said that U.S. Bancorp has agreed to finance $100 million worth of solar installations in 2009.

That’s double the money the bank committed to provide SolarCity in June when the original deal – but not the financial details – was announced.

SolarCity, based in the Silicon Valley suburb of Foster City, offers customers the option of leasing their rooftop panels and thus avoiding the five-figure cost of buying a solar system.

The company retains ownership of the solar array and thus qualifies for a 30 percent federal tax credit against its cost. Since most startups have no use for such tax credits, they give them to investors in exchange for financing installations.

Still, most such tax equity partnerships have collapsed along with the Wall Street banks that often funded them. In fact, U.S. Bancorp stepped in after Morgan Stanley pulled the plug on a financing arrangement with SolarCity earlier this year.

“For all of this year, tax equity has been the number one constraint in financing for the entire solar industry,” said Lyndon Rive, SolarCity’s chief executive. “In the third quarter of last year there were about 20 active banks and insurance companies making tax equity investments. They all fell off a cliff and now there’s three or four.”

You can read the rest of the story here.

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