Solar panels seem like a great idea in theory, but they're too expensive for homeowners who don't have thousands of dollars to burn. The problem has generated a cottage industry of companies--including SunRun, Sungevity, and SolarCity--that lease solar systems to budget-minded customers. Now PG&E is giving solar leasing a big push with a $100 million tax equity project financing agreement for over 3,500 SunRun home installations in California, Arizona, Colorado, Massachusetts, and New Jersey. According to PG&E, the $100 million fund is the biggest single solar lease pool ever created.
The New York Times explains how SunRun's system works:
Homeowners do not pay for solar arrays – which can cost more than $30,000 — but sign a power purchase agreement with SunRun that fixes the cost of their monthly electricity payments for as many as 18 years. In exchange, SunRun installs, owns and maintains the solar systems. SunRun and other companies that lease solar energy systems qualify for a 30 percent tax credit against the cost of the arrays. Since most start-ups have no use for such tax credits, they give them to investors in exchange for financing installations.
PG&E does have a vested interest in solar leasing programs. As part of the agreement, PG&E subsidiary Pacific Energy Capital gets a federal tax credit of 30% of the fair market value of installed SunRun systems.
This deal won't likely be the last of its kind for PG&E, which previously created a $60 million tax equity fund with SolarCity. While distributed solar systems free customers from the grid--and in turn, from PG&E--the utility reasons that companies like SolarCity will get funding from somewhere. It might as well be PG&E. So keep an eye on the utility--it may give more cash to Sungevity, SunRun, or SolarCity soon enough.