Department of Energy finances $2.6 billion solar project with NRG Energy and Prologis.
Bank of America has secured a federal loan guarantee that will allow it to finance the world’s largest single effort to put solar panels on rooftops, the company said Wednesday. The total cost of the project is $2.6 billion, and will be financed by the private sector over a four year period. The loan guarantee — made through the Department of Energy — means the government is on the hook for part of the project’s costs should it fail.
Industrial real estate owner Prologis and the utility NRG Energy, estimates the solar installations will result in 733 megawatts of solar energy production. That’s about half the size of a nuclear reactor, or enough energy to power around 100,000 homes. The project involves putting solar panels on hundreds of industrial buildings in a number of states across the country.
“This program will nearly double the amount of grid-connected solar online in the United States today and make another positive contribution to cleaner air and a healthy environment,” Tom Doyle, president of NRG Solar, said in a statement.
The loan guarantee is being facilitated through the Department of Energy’s Financial Institutions Partnership Program, a program that is ending this fall, and is likely to spark a series of deals over the coming months.
Generous government subsidies are the main reason the economics for solar work in the United States. Between federal, state and local incentives, up to 50% of the cost of a solar system can often be subsidized. The government is funding this industry because it hopes that creating a market will foster technological innovation in the space, driving down the cost of solar panels to the point where they are competitive with fossil fuels.
Nathaniel Bullard, a solar analyst at Bloomberg New Energy Finance said the BofA deal is the largest single financing deal produced so far by the program. “What’s just as interesting is that it’s not just for one project, but a suite of hundreds of projects.”
Prologis, a large operator and developer of industrial real estate, will provide access to rooftops, in addition to holding an equity stake in the project. NRG Energy is slated to be the lead investor in the project’s first phase, a 15 megawatt capacity to be installed in Southern California.
The project is expected to decrease the costs of solar power to compete with fossil fuel prices and generate at least 40,000 jobs directly (indirectly could be an additional 20-30K).
Solar panels will be introduced in the following states: Washington, Oregon, Nevada, Texas, Florida, New Jersey, North Carolina, Pennsylvania, Ohio, Colorado, Illinois, Wisconsin and other states, which have renewable energy requirements for utilities.