SolarCity on Wednesday said that high-flier First Solar will invest $25 million in the company and supply it with panels over the next five years.
The supply arrangement will allow SolarCity to offer itsin more states, in the U.S. East Coast, CEO Lyndon Rive said on Wednesday.
The start-up company is one of a handful of firms tackling the high up-front cost of purchasing solar electric panels by offering a. Instead of paying $25,000 to $35,000 to buy panels, the homeowner or small business pays a monthly fee for 20 years. SolarCity owns and maintains the panels.
SolarCity offers the program in states where a customer will pay less per month on electricity by leasing the panels, explained Rive. Because First Solar's panels, or modules, are the most cost-effective in the industry, SolarCity can expand to more places.
"Let's say that a customer pays $150 a month on electricity. In some cases, leasing would add $10 to their monthly spending," Rive said. "The difference this module will make is that it brings the cost down just so slightly to make it a positive cash flow to the customer."
By owning the panels themselves, solar installers and leasers like SolarCity can take advantage of the tax credits and other renewable energy incentives.
As part of the deal, First Solar will supply 100 megawatts worth of its panels to SolarCity over the next five years, starting in the first quarter of next year. A typical rooftop solar panel installation is between 2 and 5 kilowatts. SolarCity will continue to install panels from other manufacturers Kyocera, Evergreen Solar, and BP Solar.
For First Solar, the deal will allow entry into the residential market. The company, which manufacturers thin-film solar cells from cadmium telluride, has its panels installed at corporations or solar farms for utility-scale generation.
First Solar's $25 million investment is part of a $30 million series D round, which SolarCity closed on Monday. That financing included participation from previous investors Draper Fisher Jurvetson and Double Bottom Line Investors.
SolarCity currently offers its leasing program, which is chosen by 90 percent of new customers, in California, Oregon, and Arizona.