SAN FRANCISCO (Dow Jones)–PG&E Corp. (PCG) said Wednesday it has agreed to provide $60 million in financing to solar panel installer SolarCity Corp. to install more than 1,000 rooftop solar systems in California and other states.
The San Francisco-based utility holding company is pursuing the deal through an unregulated subsidiary, called Pacific Venture Capital LLC, that has been inactive since PG&E's bankruptcy, which ended in 2004.
In return for providing privately held SolarCity, of Foster City, Calif., with upfront funds to develop and build the new solar systems, Pacific Venture Capital will receive federal investment tax credits and local rebates for the solar energy projects, as well as lease revenues from SolarCity customers, the companies said.
SolarCity plans to install and own the solar power generators on homes and businesses in California, Arizona and Colorado, and receive payments from building owners or occupants in the form of leasing fees or power purchases.
PG&E has been looking at various ways to invest in renewable energy, and saw the agreement with SolarCity as one way to do this while also having an opportunity to learn more about the rooftop solar market, said PG&E spokesman Brian Hertzog.
"One driver for this was the opportunity to get insight and experience with the distributed solar space, which we see, as the parent company of a utility, as something that could have significant implications for our business down the road," Hertzog said.
Hertzog added that the move to provide tax equity financing for small-scale solar-panel installations is separate from the utility's plan to develop and own 250 megawatts of solar-panel generation. The latter program, which hasn't yet received state regulators' approval, is likely to focus on larger-scale projects, he said.
Meanwhile, PG&E's unregulated unit could pursue additional financing deals like the one with SolarCity.
"While we're not actively engaged in anything now, there's the potential for that in the future," Hertzog said.
California requires PG&E and other utilities to use renewables for a fifth of the power they sell by the end of 2010, with that mandate set to expand to 33% renewables by 2020. A separate program, called the California Solar Initiative, provides rebates to utility customers to install solar generators.
PG&E customers have installed, or plan to install, more than 248 megawatts of solar-power generation, more than customers of California's other utilities, according to state regulators.
Shares of PG&E closed Wednesday 1.2% lower at $45.03.
