Financing Heating Up For Solar Industry
Sep 29, 2009 - Donna Howell - Investor's Business
|This SolarCity installation
is on a single-family home in Phoenix.
Lending is starting to flow a little more freely
toward solar-power projects and providers, after a
stall. The industry, still beset by oversupply and
reliant on government perks for survival, could use
Financing "is one of the most important issues —
maybe the most important," said John Hardy, a Broadpoint
It's all some projects need to move forward, he says.
"For the most part, the (financing) math makes sense
on good-quality projects," with a key tax credit's
availability extended through 2016. On the other hand,
he says, interest rates for funding solar projects
are as much as 2% higher than a couple years ago.
|Among SolarCity's larger projects
is this one at eBay's corporate headquarters in
San Jose, Calif.
On Tuesday, the top installer of solar power systems
for U.S. homes, SolarCity, said it's doubled to $100
million a financing arrangement it has with U.S. Bancorp
(USB). The tax-equity plan lets privately held SolarCity
provide nothing-down "solar leases" to customers,
who pay back over time as their new solar systems
save money vs. old electric bills.
While banks remain selective, financing in the solar
industry is better than it's been the past year, says
Lyndon Rive, CEO of Foster City, Calif.-based SolarCity.
"Financial markets in general are improving since
the cliff we (all) fell off starting in August last
year," he said.
One big factor, he points out, is a change made by
the federal stimulus bill in February. Where the feds
had provided a 30% investment tax credit on solar
projects, the government has begun letting that be
taken instead as an upfront cash grant.
That makes "a big difference in the banks being able
to do this," Rive said. Applications came out at the
end of July
. "You're seeing smaller projects first are finding
it much easier to get funding than six months ago,"
SolarCity installs solar systems with components
made by the likes of First Solar (FSLR), the No. 1
solar company in the U.S. First Solar also is ramping
up its financing. This month, Tempe, Ariz.-based First
Solar said it has a new $300 million revolving-credit
facility from a syndicate of nine financial firms.
China's Trina Solar (TSL) also recently said it got
a $304 million, five-year loan.
"Far and away, First Solar and (No. 2 U.S. solar
supplier) SunPower (SPWRA) are the top beneficiaries
of project financing in the U.S.," Hardy said. "SunPower
is going to begin construction on a very large project
for PG&E (PCG) next year. First Solar is starting
projects with SoCal Edison."