Where’s the money in solar power these days? It’s not in manufacturing the stuff; companies that do that are dropping like flies.
No, the returns are in owning and installing the systems, with the combination of falling module prices and solid government subsidies turning that side of the business into a money maker.
Credit Suisse this week confirmed (again) distributed solar’s current appeal as a business venture, putting $100 million into SolarCity and $200 million into Sunrun to back new residential and commercial installations, most of which are done these days through leases or power-purchase agreements.
“The residential solar market is thriving right now, and the model Sunrun created for affordable home solar is driving that success,” Jerry Smith, managing director of the Credit Suisse Strategic Transactions Group, said in a statement. “For Credit Suisse, this partnership is an opportunity to work with a proven leader in a growing industry while investing in positive environmental change.”
The backing for SolarCity was actually the second part of a two-part deal; part one was also $100 million.
“Investments like this help us provide solar electricity at a discount to utility power to a wide range of homeowners and businesses,” said Benjamin Cook, SolarCity’s vice president of structured finance.
That’s the key here: At utility scale, solar (like wind) doesn’t yet compete with the cheapest fuel going, natural gas. But put solar on individual rooftops and it’s a whole different matter. The current cost, subsidy and regulatory structure allows the companies who own those systems to sell power to homeowners and businesses at rates that beat the retail price of electricity – especially in high-cost electricity markets like California.