The bank has agreed tobankroll commercial projects to be built and operated by SunPower. Twoprojects already are underway in California.
The deal, announced Monday, would fund projects for businesses,universities or government agencies in the United States, SunPowersaid. It also came at a time when project financing is still hard tocome by, though solar companies are hoping to see an improvement in thesecond half of this year.
As the investor, Wells Fargo would own the systems while San Jose,Calif.-based SunPower would design, build and operate them. Customerswould sign long-term power purchase agreements with SunPower to pay forusing solar electricity.
The investment would entitle the bank to get a 30 percent federaltax credit, or it could opt to receive the equivalent in grants fromthe U.S. Department of Treasury. Wells Fargo declined to say whichoption it would choose.
Congress made it possible to get grants instead of the tax credit inthe stimulus package it approved in February this year. Lawmakerswanted to spur solar energy development, which had largely been stalledbecause of the credit crunch.
The grants are meant to allow project developers quicker access tofinancing. But the treasury department has yet to publish the rules andapplication form for the program, prompting complaints from projectdevelopers (see Solar Companies Fear Delays as Feds Work Slow Magic). It’s expected to post the rules next month.
SunPower already is carrying out two projects that are beingfinanced by this Wells Fargo fund. It’s building a 1.1-megawatt systemfor the University of California at Merced and a 1-megawatt system forthe Western Riverside County Regional Wastewater Authority. SunPowerplan to complete both projects by the end of this year.
Power purchase agreements have become a popular way for businessesand governments to get the cost and publicity benefits of using solarelectricity without having to fork over the expensive upfront costs ofinstalling and owning them. A 1-megawatt system would cost roughly $7million to install. SunPower said it pioneered the PPA approach.
The PPA model also has migrated to the residential solar market. San Francisco-based SunRun, for example, offers PPAs through installers.
SolarCity, an installer, offers a lease program to both residential customers. The Foster City, Calif.-based company has announced two funds so far this year to finance both residential and commercial projects.
The last time SunPower announced a financing fund was back in January 2008, when GE agreed to back five projects in California totaling 8 megawatts. The companies didn’t disclose the amount for the fund.
Image of a SunPower installation in Florida via SunPower.