After failing to complete a DoE loan guarantee to support a planned 300MW solar rooftop project for US military housing, SolarCity and Bank of America Merrill Lynch have completed the financing on their own.
November 30, 2011 – After failing to complete a DoE loan guarantee to support a planned 300MW solar rooftop project for US military housing, SolarCity and Bank of America Merrill Lynch have completed the financing on their own.
The SolarStrong project aims to put solar power on up to 120,000 privatized military housing units across the country — up to doubling the number of US residential solar installs — giving those communities lower rates on electricity, and a green option to boot (pun slightly intended). Initially the company was in line for a $344M DoE loan guarantee, but couldn’t close the deal before the DoE program’s Sept. 30 deadline.
Unwavering, though, BofA Merrill and SolarCity kept going and “create[d] a financing structure that works without it,” according to SolarCity CEO Lyndon Rive. He called the size/scope of this project “uncharted territory for residential solar,” and also proof that “long-term incentives such as the investment tax credit are working” even without the DoE’s loan support.
“This is a groundbreaking transaction that represents a key milestone for the US solar industry,” added Tim Newell, managing director for private equity firm USRG Renewable Finance, which advised SolarCity in the financing negotiations.
SolarCity says the SolarStrong project will create “thousands of full-time and temporary jobs” (initially it suggested “nearly 6000 direct job-years” tied to installation and ongoing maintenance), with many of them filled by US veterans and military families. The first SolarStrong-eligible project is already underway at the Joint Base Pearl Harbor/Hickam in Hawaii, tying together ~2000 homes.
Such a deal simply wasn’t conceivable a year ago, both sides say. When it first came up with the plan in mid-2010, SolarCity “did not believe it could secure financing for a project of such a scope,” the company says. Debt financing was only available for large-scale utility-scale projects, not distributed ones that have to deal with multiple and often disparate regulations. Things started opening up, though, with BAML’s $1.4B backing of NRG/Prologis’ June 2011-finalized 733MW plan for distributed rooftop solar installs, notes the New York Times. That project, witnessed US Energy Secretary Steven Chu, could well be “a model for other rooftop solar projects of this magnitude” — and it convinced BAML that it could stomach more distributed solar projects even without government backing. Jonathan Plowe, a BAML managing director, reiterated what he thinks the SolarCity/SolarStrong plans, and other rooftop solar projects in general, have going for them: PV technology “is proven,” diversification of installation sites reduces risk, electricity transmission isn’t hard, construction timetables are short, and it’s a green resource with “few negative environmental consequences.”