Will Wells Fargo Become Solar Lender of Choice? (WFC)

There has been an interesting ride in the solar sector that was almost identical to what was seen in the tech bubble days in 1999 and 2000.  Just like the tech bubble, the solar bubble burst.  But there is still demand from customers to install solar panels on the roofs of their homes and businesses.  At least under the right conditions.  Wells Fargo & Co. (NYSE: WFC) may be one possible answer as one of the private lenders of choice for those seeking solar projects.

The Charlotte Business Journal has noted that Wells Fargo, the new parent of Charlotte’s Wachovia Corp., has financed 125 commercial scale solar photovoltaic projects in 10 states since the fall of 2007.  This may sound large, but it really represents only about 6,000 homes’ worth of power.  That is not even a drop in the bucket in the grand scheme of things.

The good news is that Wells Fargo appears to want to do more in the sector.  Wells Fargo provided $250 million in equity capital to solar photovoltaic projects developed by solar energy providers MMA Renewable Ventures.  And you have already seen some solar companies starting to offer financing of projects on their own.

As with any loan application process, and particularly in this field, “wannabe” borrowers better have their ducks in a row before asking a banker for a loan.  Doubly so in anything dealing with alternative energy that has a long-term payoff that may or may not occur.  And remember there is a credit crunch.  Even if Wells Fargo claims it is loaning in the space as it is facing economic challenges and cuts elsewhere, any bank is likely going to want to see about the appropriate tax credits or available government funds which can help in the math when borrowers show cost and time to break-even or savings estimates.

Jon C. Ogg
March 25, 2009