Dive Brief:
- SolarCity secured a new $400 million fund from Bank of America Merrill Lynch (BofA) for financing residential rooftop solar lease deals. BofA previously partnered on a similar $200 million fund for financing solar lease deals with SolarCity, the leading U.S. residential solar installer.
- BofA recently partnered with SunPower, another major player in the sector, on a $220 million fund for solar lease deals. The funds add to the $31 billion-plus BofA has invested toward its 10-year goal to invest $50 billion in low-carbon solutions.
- The $400 million dollar BofA fund is expected to boost SolarCity installation activity which already accounts for one-third of all U.S. residential rooftop installs through 55 service centers in 15 states.
Dive Insight:
Q3 2014 was the first quarter when 300 megawatts of residential PV came on-line. The residential sector has grown for 18 of the last 19 quarters and will be bigger than the non-residential sector by the end of 2017.
The SolarCity leasing programs are part of the larger third-party ownership (TPO) marketplace. They have helped boost U.S. residential rooftop solar. They finance 67% of residential systems in New York and 92% in New Jersey, according to Greentech Media.
TPO is popular with homeowners because it offers solar ownership with no upfront down payment or maintenance responsibilities. It is popular with big funders like BofA because it offers a secure return on equity. Homeowners default on their power bills even less often than they default on their mortgages. The equity investor also benefits from the 30% investment tax credit and accelerated depreciation.
TPO’s popularity is declining in California and Arizona, where the solar installed cost has dropped. In response, SolarCity and other leading TPO companies have begun offering loans to finance system ownership.
