PG&E to Finance SunRun
by David R. Baker
Stepping into a role traditionally filled by banks, PG&E Corp. will spend $100 million to help a San Francisco company finance solar panel installations, under a deal to be announced today.
A PG&E subsidiary will provide the funding to SunRun Inc., which will use the money to install more than 3,500 home solar systems in at least five states.
Unlike most solar companies, SunRun pays most of the installation costs of residential solar systems, and continues to own the system afterward. Customers buy the power from the solar panels, not the panels themselves.
Under the deal, those customer payments will be split between SunRun and PG&E subsidiary Pacific Energy Capital. The subsidiary also will receive federal investment tax credits from the installation projects. PG&E Corp., which is the corporate parent of the Pacific Gas and Electric Co. utility, will make a profit on the deal, although the exact amount remains confidential.
Banks used to provide this kind of financing but largely stopped during the credit crisis of 2008. The banks are starting to step back into this business, SunRun Chief Executive Officer Edward Fenster said. But he still chose to work with PG&E.
"In many ways, it makes much more sense for a utility (holding company) to finance this than a bank," he said. "They understand the projects and the risks better."
The SunRun agreement marks the second time that PG&E Corp. has entered this kind of financing arrangement for solar installations. In January the company, based in San Francisco, announced a similar $60 million deal with SolarCity Corp. of Foster City.
Brian Steel, PG&E's senior director of corporate strategy and development, said more deals could follow.
"We're making this as an investment, one in which the prospective returns are attractive to our shareholders as well as strategic for the company," he said.
The SunRun solar systems funded by PG&E will be installed this year and next in Arizona, California, Colorado, Massachusetts and New Jersey.
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