November 16, 2024

SolarCity Wins Financing for Military Housing Plan

The company, SolarCity, plans to announce Wednesday that Bank of America Merrill Lynch will lend it up to $350 million to put solar electric panels on roofs and other areas to power as many as 120,000 homes for military personnel over the next five years.

Under the program, which would roughly double the number of homes with solar power if fully carried out, SolarCity will install, operate and own the solar systems, said Lyndon Rive, the company’s chief executive. Customers will pay the company for the electricity they use, with any unused power feeding back to the military bases.

The San Mateo, Calif., company had originally hoped to serve up to 160,000 homes with the help of a loan guarantee from the Obama administration. In early September the energy secretary, Steven Chu, announced preliminary approval of a guarantee that would have covered $275 million of a $344 million loan from Bank of America Merrill Lynch for the program, called SolarStrong.

But the public uproar over the bankruptcy of Solyndra, a solar module maker that had received a $535 million loan guarantee from the same program, cast a pall over other companies’ applications even as the Energy Department was racing to evaluate them before the guarantee program expired on Sept. 30.

Near the end of September, the Energy Department told SolarCity it would not be able to approve the guarantee after all, having run out of time to finish the paperwork before the program’s deadline. At the time, Mr. Rive said that the scrutiny the program was under influenced the department’s decision.

However, the financial profile of the rooftop solar program was still attractive to Bank of America Merrill Lynch. The bank is lending up to $350 million for the scaled-back program without the guarantee. Its backing comes as other banks and companies including Google have been financing distributed solar programs at SolarCity and competitors like SunRun and Sungevity that make rooftop solar systems affordable to homeowners.

“It’s a huge leap forward for the distributed solar market because what we’ve done is create a financing model that can make distributed solar affordable on a huge scale without a guarantee from the federal government,” said Jonathan Plowe, a managing director at the bank.

A year ago, he said, debt financing was available only for large-scale, utility-based projects that did not face the challenges of distributed solar programs, which are by nature fragmented and have to negotiate differing local regulations and procedures.

But after Bank of America Merrill Lynch backed a distributed solar project by NRG and Prologis Inc. that did win a federal loan guarantee, it decided it had a process in place to handle the risks of proceeding without government backing, according to Mr. Plowe.

He said the bank decided the SolarCity project was a solid investment for several reasons: photovoltaic technology is proven, the diversity of installation sites reduces the risk of a failure everywhere at one time, the electricity is relatively easy to transmit, construction time is short and there are few negative environmental consequences.

Solar developers can also take advantage of a 30 percent investment tax credit.

SolarCity executives declined to say how much of a return their investors could expect or to predict how many developers of military housing would sign up to buy the solar power.

Article source: http://feeds.nytimes.com/click.phdo?i=04218d61a8ea05614ff6a89da1b9a2f5

Report Calls for Energy Dept. Changes

On Tuesday, the department’s inspector general, Gregory H. Friedman, issued a report calling for a wholesale restructuring of the department’s far-flung laboratories and other operations. He warned that “painful” staff reductions were certain to come as Congress sought deep federal budget cuts in the months ahead.

In one of his more striking criticisms, Mr. Friedman wrote that the department spent nearly $13 billion a year to run 16 separate laboratories but that only about half of that money went toward actual research, with 49 percent paying for overhead and capital spending. That ratio is “out of sync,” he said, and could be improved by combining some operations. The report noted that the Energy Department has three centers for nuclear weapons work, two for Navy propulsion reactors, five for energy technology and 13 for general science. “The department’s research complex is organized essentially as it has been for over a half-century,” it said.

Mr. Friedman called for the creation of an independent panel to examine ways of consolidating the labs.

The Department of Energy, whose origins date from the development of the nation’s atomic weapons program during World War II, was formally created in 1977 by the Carter administration. It has since grown into one of the government’s chief sponsors of advanced research and was one of the largest recipients of stimulus money — $35 billion — in the early months of the Obama administration.

The department has an annual budget of about $24 billion, not counting the one-time stimulus grants, and oversees more than 115,000 workers, including federal employees and contract personnel.

The agency has drawn heavy criticism in recent months for its handling of some green energy projects financed with stimulus money, particularly the loan guarantee to Solyndra, a solar equipment company. The report recommended that the loan guarantee program be placed on a department “watch list” of significant issues.

“Given the significance of the funds involved and the government’s exposure to risk, we believe that heightened and continued focus on this program is necessary,” Mr. Friedman wrote.

His report said that to save money and reduce duplications of effort, the department should also reabsorb the agency that handles nuclear weapons, the National Nuclear Security Administration, which was made a separate organization in 2000 because of security concerns.

Similar recommendations for other departments are likely to emerge as Congress moves to cut domestic spending. A report from a special Congressional committee drafting a plan to cut the deficit by $1.2 trillion to $1.5 trillion over 10 years is due this month.

The Energy Department had no immediate comment on the new report. But the Republican chairman of the House Energy and Commerce Committee, Representative Fred Upton of Michigan, said, “The broad concepts make a lot of sense.”

The report also warned that the department would probably also be forced to cut the $6 billion it spends each year on cleaning up pollution left over from nuclear weapons production. What money remains should be spent on the worst contamination, and not allocated by the state-by-state agreements now in force, it said.

The cleanup program involves two million acres in 35 states and employs more than 30,000 workers.

The inspector general warned that changes in the department’s organization could “have a significant impact” in states like Idaho, New Mexico, South Carolina, Tennessee and Washington, where department facilities and contractor operations are among the largest employers.

Article source: http://feeds.nytimes.com/click.phdo?i=82047c8c570833767d4b6db51057e343