SolarCity, a Foster City, Calif.-based provider of solar energy systems, has closed a $60 million tax equity investment deal with Pacific Venture Capital, a subsidiary of San Francisco power company Pacific Gas and Electric (PG&E).
Until the great recession and the credit crisis, tax equity financing was a common source of funding for cleantech developers. But these days, deals like SolarCity’s are rare.
Here’s how the deal works: SolarCity installs the PV systems on commercial and residential properties. The property owners make lease payments to SolarCity, who owns the systems. This makes SolarCity eligible for the 30 percent federal investment tax credit. However, in this deal, SolarCity passes the tax credit on to Pacific Venture Capital in exchange for the $60 million investment and a share of the lease revenues.
The two companies did not disclose expected revenues.
SolarCity plans to use the cash to finance the installation of more than 1,000 solar systems, mostly in California and the U.S. Southwest.
In a prepared statement Rand Rosenberg, senior VP of corporate strategy at PG&E, said:
Equally significant, [this investment] 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.
Last spring SolarCity closed on a tax equity investment (of an undisclosed amount) with Greystone Renewable Energy Ventures, an affiliate of private investment firm Greystone & Co.