SolarCity and Bank of America Merrill Lynch today announced that they have agreed to terms on financing for SolarStrong, SolarCity’s ambitious five-year plan to build more than $1 billion in solar power projects for privatized U.S. military housing communities across the country. As part of the project, SolarCity plans to partner with the country’s leading privatized military housing developers to install, own and operate rooftop solar installations and provide solar electricity at a lower cost than utility power. SolarStrong is ultimately expected to create up to 300 MW of solar generation capacity that could provide power to as many as 120,000 military housing units. SolarStrong would be the largest residential solar PV project in American history.
“This project demonstrates the long term viability of large-scale, distributed solar generation,” said Jonathan Plowe, head of New Energy and Infrastructure Solutions at BofA Merrill. “We are excited to see the project through with SolarCity and extend our expertise and financing capabilities to propel residential solar to the next level.”
Private equity firm U.S. Renewables Group (USRG) served as financial advisor for SolarStrong. When SolarCity began to plan SolarStrong in mid-2010, the company did not believe it could secure financing for a project of such a scope without a loan guarantee from the U.S. Department of Energy (DOE). SolarCity and USRG began the loan guarantee application process under DOE’s Section 1705 loan guarantee program in October 2010, and BofA Merrill subsequently joined the application as lender. The DOE announced a conditional commitment of a partial loan guarantee for SolarStrong on Sept. 7, 2011, but the parties were unable to finalize the loan before the Sept. 30 program deadline. SolarCity and BofA Merrill continued to work to close SolarStrong without the loan guarantee.
“BofA Merrill never wavered when the loan guarantee wasn’t finalized and worked with us to create a financing structure that works without it,” said Lyndon Rive, SolarCity’s chief executive officer. “SolarStrong makes affordable clean energy available on a much greater scale. This is uncharted territory for residential solar. The fact that SolarStrong can move forward without a federal loan guarantee is a clear indication that long-term incentives such as the investment tax credit are working.”
SolarCity expects SolarStrong to create thousands of full-time and temporary jobs. The company hopes to provide as many of those jobs as possible to U.S. veterans and military family members, which have been among those hardest hit by the economic downturn. SolarCity has added more than 1,200 new, full-time workers since the recession began in December 2007; creating more than one new job per workday in that timeframe.
“This is a groundbreaking transaction that represents a key milestone for the U.S. solar industry,” said Tim Newell, managing director for USRG Renewable Finance. “We’re proud to be part of this project that will invest in military communities across the United States.”
The SolarStrong project will allow privatized military housing developers to save money on energy costs that can be reallocated toward quality-of-life improvements and enhanced services for military families. SolarStrong will also help the Department of Defense — the single-largest energy consumer in the U.S. — secure more of its energy needs from renewable sources operated in parallel with the utility grid.
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