Elon Musk’s electric car and rocket ship ventures may score the headlines—but SolarCity, his rooftop photovoltaic venture, is proving the market leader of a booming business. The Silicon Valley company today further consolidated its position as the US’s largest residential solar installer with the announcement that Goldman Sachs will finance $500 million in leases for SolarCity’s customers.
The fund will result in the installation of 110 megawatts (MW) of rooftop solar panels, or 44% of the 250 MW that SolarCity expects to install this year. Musk serves as chairman of SolarCity, which was founded by his cousins Lyndon Rive and Peter Rive, and holds more than a quarter of its shares.
About 90% of SolarCity’s customers opt to lease a rooftop photovoltaic array rather than fork over five-figure-sums to purchase solar panels. That means SolarCity’s business is dependent on raising tax equity funds to finance those leases. Financial heavy-hitters like Goldman, US Bancorp and Credit Suisse have created such funds because they get a 30% federal tax credit on every solar system leased. (And depending on how the fund is structured, they may also receive a steady flow of cash from homeowners’ lease payments.)
Source: Quartz. Read full article. (link)