SolarStrong, a project to install rooftop solar panels at 120,000 military homes, will see the light of day after nearly being derailed by political infighting in Washington.
Solar installer SolarCity today said it has secured the financing needed to install about 300 megawatts' worth of solar panels at homes on military bases. The company and the project lender, Bank of America's Merrill Lynch, expect this to be the largest distributed solar-energy project to date, requiring $1 billion in financing over the next five years.
The project calls for installing solar panels at the homes of military personnel at U.S. bases at no or little cost to the resident. SolarCity will own the systems and offer financing where the resident pays a monthly fee or for the power produced. Once the panels are producing electricity, the resident pays a lower monthly electric bill than before.
This sort of financing is contributing to rapid installation of rooftop solar photovoltaics in the U.S. since it avoids the upfront cost of buying panels. But it has never been done at the scale of 300 megawatts, which is comparable to a medium size power plant's capacity.
The parties behind the project had originally applied for a Department of Energy loan guarantee worth $344 million in the case of a default. The plan received a conditional loan guarantee in September. But congressional investigations into failed solar company Solyndra, which also received a loan guarantee, delayed processing of SolarCity's application beyond the September 30 deadline.
Today, however, SolarCity and Merrill Lynch say they can move ahead with the project without a guarantee from the federal government. The bank would always have been the primary lender in the deal, but it now confident that it doesn't require a guarantee, said Jonathan Plowe, head of new energy and infrastructure solutions at Merrill Lynch.
Merrill Lynch was also involved in a similar distributed rooftop solar project for commercial buildings, called Project AMP, which did receive a DOE loan guarantee. Between the two projects, the company feels that it has developed an effective financial structure, which combines debt and equity, for large-scale distributed solar power, Plowe said.
"There weren't large-scale financing tools available for this as recently as a year ago," he said. "The tools we've developed with the two transactions are going to facilitate more large-scale projects."
Having large projects helps attract more capital to residential solar and helps bring down the cost of solar installations, added SolarCity CEO Lyndon Rive. The price of solar panels has plummeted over the past two and a half years, but installation still remains about half of the total cost.
The DOE loan guarantee would have required SolarCity to work in certain states, but the new arrangement gives the company more flexibility, Rive said. It intends to start installing solar panels in states with high electricity costs, starting with Hawaii and California, and then move on to Texas and Northeast states, he said.