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Citi isn’t new to investing in solar energy projects, but the bank previously preferred to make money from solar projects built for businesses and public agencies. But it has now jumped solidly into the residential solar installation market by agreeing to back $40 million in solar installations by SolarCity, the bank said Tuesday.
SolarCity will use the money for solar projects built this year and primarily on the west coast. The San Mateo, Calif.-based company announced plans last week to expand to the East Coast by buying installer Clean Currents Solar in Maryland. In addition to Maryland and Washington, D.C., SolarCity offers solar services in Arizona, California, Colorado, Oregon and Texas.
The ability to offer financing options is critical for solar installers given that solar electric systems are too expensive for average consumers. Different models have emerged for solar service providers in the past five years. SolarCity has raised money to fund more than $700 million in installations, in both residential and commercial sectors, since its inception in 2006. The $40 million budget is the 12th fund for SolarCity, Jonathan Bass, a SolarCity spokesman, said.
The company, with roughly 1,000 employees, offers sales, installation, financing and operation and maintenance of solar electric systems in house.
Installers such as groSolar and Real Goods Solar, meanwhile, direct their customers to SunRun, which provides not only sales and financing but also monitoring of the systems after their installations. Sungevity offers similar services in-house and hires contractors to do the installation. Last December, Sungevity said it had raised $15 million to fund an expansion of its service to the East Coast.
And then, you have Solar Universe that is creating a franchise of installers and referring consumers to certain banks or even solar panel manufacturer Suntech Power for financing.
Like other service providers, SolarCity offers leases and power purchase agreements. Leases are generally more popular among homeowners, who pay a fixed monthly fee. Power purchase agreements require customers to pay the amount of electricity generated but not the equipment and installation costs.
SolarCity has booked or completed more than 10,000 residential projects and hundreds of commercial projects since its start, Bass said. More than 7,000 of them involve leases.
Although Citi is new to residential solar financing, it has put up money in commercial and government installations before. It has worked with Helio Micro Utility to finance solar electric systems at businesses and government facilities.
Other banks that have been more active in the residential solar sector include Wells Fargo and U.S. Bank, which has provided money to fund projects from SolarCity, Sungevity and SunRun.
While some of these banks want consumers and businesses to go solar, they haven’t quite embraced the idea themselves. Banks that have installed solar electric systems at their own branches or headquarters include Rabobank and National Bank of Arizona. On Tuesday, TD Bank said it’s building a new branch in Florida that will feature energy efficiency technologies and solar panels.
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Photo courtesy of SolarCity