Wells Fargo Banks on $100M Solar Financing

Wells Fargo (WFC) has agreed to finance up to $100 million of solar energy projects to be built and maintained by SunPower (SPWRA).

The just announced deal would fund projects for businesses, universities or government agencies in the United States. It also came at a time when project financing is still hard to come by, though solar companies are hoping to see an improvement in the second 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. Customers would sign long-term power purchase agreements with SunPower to pay for using solar electricity.

The investment would entitle the bank to get a 30 percent federal tax credit, or it could opt to receive the equivalent in grants from the U.S. Department of Treasury. Wells Fargo is still deciding which option it will choose.

Congress made it possible to get grants instead of the tax credit in the stimulus package it approved in February this year. Lawmakers wanted to spur solar energy development, which had largely been stalled because of the credit crunch.

The grants are meant to allow project developers quicker access to financing. But the treasury department has yet to publish the rules and application form for the program, prompting complaints from project. It's expected to post the rules next month.

SunPower already is carrying out two projects that are being financed by this Wells Fargo fund. It's building a 1.1-megawatt system for the University of California at Merced and a 1-megawatt system for the Western Riverside County Regional Wastewater Authority. SunPower plan to complete both projects by the end of this year.

Power purchase agreements have become a popular way for businesses and governments to get the cost and publicity benefits of using solar electricity without having to fork over the expensive upfront costs of installing and owning them. A 1-megawatt system, in general, could cost roughly $7 million to install. The Wells Fargo financing could support 25 megawatts of projects -- this seems to reflect the declining costs of materials that have taken place since the credit crunch hit last fall.

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.

Disclosure: The author hold no significant interests in the companies listed.

Comments

[Steve Pluvia]

"A 1-megawatt system, in general, could cost roughly $7 million to install."

Sooo, $7/watt installed cost while FSLR is installing for less than $3.50/watt?

As usual Rickman, you re-report pr from others that makes no sense or is flat out wrong. If you spent a little more time familiarizing yourself with the solar market you wouldn't constantly make these amateur mistakes.

2009 Jul 02 01:36 PM

[Steve Pluvia]

Incidentally Rickman, the decline in the cost of installing PV over the past 6 months is the most significant event in PV history. Given your profile describes you as:

"a recognized global expert in sustainable "green" industries, financial, media and technical writing, multimedia web content, and market research development"

I'm just a little suprised you don't seem to know the current installed costs of PV from the major players?

Your cut-n-paste story says "A 1-megawatt system, in general, could cost roughly $7 million to install" then in the next sentence indicates 100m would support 25mw of projects... hmmm that sounds like $4/watt?

Apparently the bar for "global expert" isn't so high these days?

2009 Jul 02 03:41 PM

[BigVinnie]

Please know what your talking about.
A 1MW project last year for sunpower roof top systems roughly cost 6Million dollars.
A 1MW sunpower ground system last year roughly cost 7Million dollars.
First Solar sells junk PV. SunPower Sells high efficiency PV.
Sunpower cost more per watt because it's a quality solar module product VS. First solars thin film product.
Thin film PV which first solar produces costs a fraction of the amount of what it takes to produce sunpower PV. While sunpower PV requires less surface area to produce almost 3 times the efficiency of what most thin film produces.

Also take a look at your inverter systems, sunpower typically goes with higher end xantrex inverters.

You are comparing apples to oranges when it comes to cost per watt. the product lines between the 2 are not at all the same. Sunpower has proven to provide a much more superior product.


On Jul 02 01:36 PM Steve Pluvia wrote:

> "A 1-megawatt system, in general, could cost roughly $7 million to
> install."
>
> Sooo, $7/watt installed cost while FSLR is installing for less than
> $3.50/watt?
>
> As usual Rickman, you re-report pr from others that makes no sense
> or is flat out wrong. If you spent a little more time familiarizing
> yourself with the solar market you wouldn't constantly make these
> amateur mistakes.

2009 Jul 08 12:47 AM