Google has now invested $680 million into clean power projects, a size which rivals a large VC or private equity greentech fund or Department of Energy program. While Google’s investments in utility-scale centralized solar projects and transmission lines for clean power could be seen as a way for Google to source cleaner energy for its data centers, home rooftop solar installations are pretty far removed from Google’s data center energy, and Google insists the SolarCity investment is about returns and environmentalism.
Founded in 2006, SolarCity offers sales, installation, financing, operation and maintenance of rooftop solar systems in-house. In contrast to many solar installers, SolarCity offers financing options — covering the upfront cost of the system — which can be critical for consumers and businesses given that solar electric systems are too expensive for an average buyers. SolarCity offers both leases (a fixed monthly fee) and power purchase agreements, which require customers to pay the amount of electricity generated but not the equipment and installation costs.
SolarCity has raised at least a dozen funds similar to the Google one, but it usually raises these funds from banks like Citi (s c) and U.S. Bancorp (s usb) (and has also worked with utility PG&E). Lyndon Rive, SolarCity CEO, said the biggest hurdle to getting its solar projects deployed is raising project financing, and he hopes other corporations will follow Google’s lead.
Google’s $280 million fund could help deploy between 7,000 and 9,000 rooftop solar projects depending on the size of the systems, said Rive, in an interview this week. Because there are so few solar rooftop projects in the U.S. right now, the fund could theoretically help deploy one in 10 solar rooftop projects over the next two years, said Google Director of Green Business Operations Rick Needham.
Needham wouldn’t go into details about exactly what kind of return Google gets from such a fund, but Rive referred to investing in solar as a “good and fair,” return and a”safe investment.” When I asked Needham if the SolarCity fund was about the largest investment Google plans to make in clean power, he said “If we find attractive opportunities that meet our criteria, then we’re willing to make more large-scale investments.”
Over the past few months, Google has emerged as a major investor in clean power. As I’ve written before (GigaOM Pro subscription required), giving Google more control over the energy it needs for its data centers could be a smart investment in the long run, in addition to returns from clean power projects in the short term. In addition to the $280 million SolarCity fund, Google has invested in: