Pacific Gas & Electric will fund the installation and leasing of solar panels at about 1,000 homes and businesses this year.
The California utility on Wednesday announced a deal with SolarCity, a Silicon Valley start-up that will provide PG&E customers the financing to install rooftop solar panels with little upfront money. PG&E subsidiary Pacific Venture Capital will provide $60 million in tax equity to SolarCity for its installation and financing services.
Rather than own solar panels, SolarCity customers pay a monthly fee and a relatively small or no upfront investment. SolarCity, which owns the solar panels, can sell the electricity solar panels generate and take advantage of local and federal tax incentives.
The financing is structured so that customers can lower their monthly electricity rates, according to SolarCity. A contract can be a lease or a power purchase agreement, where the customer purchases the electricity the panels generate at a predetermined rate.
A number of solar installers are starting to offer financing options, which gets around the initial investment of $25,000 to $40,000, depending on the size.
But PG&E said the deal is the first between a utility and a solar financing company. "It enables us to take an initial step toward gaining valuable experience with a technology and a marketplace that may become increasingly important in the future," said Rand Rosenberg, a senior vice president of corporate strategy and development, in a statement. The installations will be in California, with some in Colorado and Arizona.
PG&E, seeking to meet aggressive renewable energy targets for California utilities, is also investing in large-scale solar plants and midsize distributed solar arrays.