Bank of America and NRG Energy are partnering to produce solar projects after the former secured a loan commitment through the US Department of Energy’s Financial Institutions Partnership Program. The loan will allow Bank of America to finance the world’s largest effort to put solar panels on rooftops.
The project is worth US$2.6 billion and is expected to install solar panels that will generate 733 megawatts of solar energy about half the size of a nuclear reactor, which is enough to power 100,000 homes. Bank of America is partnering with NRG Energy, a utility company, and Prologis, an industrial real estate owner.
“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.
With the Department of Energy facilitating the loan guarantee to Bank of America, it hooks the government in this private endeavor. It is expected to lead to a series of deals over the coming months. Generous government subsidies are the main reason the economics for solar work in the US. Between federal, state and local incentives, up to 50 percent 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.
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.