The US Department of Energy in early September approved a conditional loan guarantee of $275 million to Bank of America Corp. (NYSE: BAC) and its BofA/Merrill Lynch division to support the installation of about 371 megawatts of rooftop solar panels on 160,000 US military base housing units. The total cost of the project was estimated at more than $1 billion. BofA/ML’s partner in the project is the privately held solar installation firm SolarCity.
By late September the DoE said it would not be able to consider the loan in time to meet a September 30th deadline. Now, BofA/ML and SolarCity have said that the project will go ahead at a slightly smaller scale without the federal loan guarantee. The project, called SolarStrong, will now comprise 300 megawatts of rooftop solar panels on about 120,000 military housing units.
The clear implication of this is that distributed rooftop solar installations can be financed adequately without federal guarantees. SolarCity typically leases the systems it installs to the homeowners or signs a power-purchase agreement to sell the generated electricity back to the homeowner. In either case, the homeowner is not required to put any cash in up front, and the bank, which finances the purchase of the solar panels, is virtually guaranteed a payback on its original investment. This is a pretty sweet deal for everyone, including US taxpayers who don’t have a stake in the outcome.
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