Google on Tuesday said that it will create a $280 million fund to help SolarCity, a residential solar project financing company, to ramp up deployments.
SolarCity is a company that has been gaining traction because it provides money and financing upfront for residential solar installations. Costs are the biggest hurdle to residential solar installations. Technically, homeowners don't own the solar installation, but buy power from SolarCity at a discount.
For Google, the $280 million fund is its largest clean energy investment yet. Google has invested $680 million in clean tech. Google employees will also get SolarCity discounts.
SolarCity's business model could get traction because of the following features:
- Residents pay nothing or little upfront for the solar installation;
- Lease payments are made over a term, say 15 years;
- Lower utility bills are the big draw;
- SolarCity can sell any excess power to the grid.
In another sign of the maturity of these solar leasing models, these financing deals are being securitized and packaged for investors.