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Huge BofA Project to Install $2.6bn of Solar on Company Roofs Across U.S.

Bank of America Merrill Lynch, Prologis and NRG have unveiled a ground-breaking partnership designed to finance up to $2.6 billion of commercial and industrial rooftop solar arrays, giving a huge boost to the amount of grid-connect solar online in the U.S. today.

Once finalized the agreement will be the largest distributed solar deal in history, the partners said. They said they have been offered a conditional commitment for $1.4 billion of debt facilities from the U.S. Department of Energy’s Loan Programs Office for the project, which aims to install 733 MW of power and create the equivalent of more than 10,000 full-year jobs across 28 states.

At the end of 2009 the U.S. had about 1,250 MW of photovoltaic solar power connected to the grid, according to the Interstate Renewable Energy Council.

Bank of America was the sole financial lender in the agreement under the Department of Energy’s Financial Institutions Partnership Program. Through this program, the DOE is guaranteeing 80 percent of the $1.4 billion debt financing. Prologis, an owner, operator and developer of industrial real estate, will provide site access to rooftops and will act as developer, construction manager and program sponsor, in addition to making an equity investment.

NRG Energy will be the lead investor for the first phase of the project and has a right of first offer for the remainder. It will also provide development resources and project expertise for the installations.

The total of $2.6 billion will be financed entirely by the private sector over the next four years, the partners said. The three firms are now working to finalize the financing documentation for the project and begin the first phase of installation. Out of this phase, 15 MW of solar capacity is ready for immediate construction and installation in Southern California, where the power will be sold to a local utility under an already-executed power purchase agreement.

The deal deal is part of Bank of America’s 10-year, $20 billion Environmental Business Initiative, launched in 2007, and adds to a growing list of recent commitments including a newly established goal by the company to reduce its global green house gas emissions 15 percent by 2015, and the launch of a $55 million energy efficiency finance program.

“As one of the world’s largest owners of distribution facilities and an active solar industry participant, we’re pleased to be a partner in a project of this magnitude,” said Drew Torbin, vice president of Prologis Renewable Energy. “This project will add significant scale to the distributed solar market and provides economic and environmental benefit to our shareholders and customers.”

“NRG believes rooftop solar is a smart choice for industrial, commercial and residential property owners in markets around the country, and this program provides the commercial scale that will bring the benefits of solar power to customers across the country,” said Tom Doyle, president of NRG Solar, NRG’s solar subsidiary.

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7 thoughts on “Huge BofA Project to Install $2.6bn of Solar on Company Roofs Across U.S.

  1. First I want to say that the installation is a good idea. I take no issue.

    What above article does not mention is that Prologis (Prologis Renewable Energy)is out with a common stock offering today of 30 mil shares at $33.50 underwritten in part by BofA. In the end BofA will pay nothing and “shareholders or suckers will pay. See PLD an recent stock price chart. Draw your own conclusions for the reasoning.

  2. Probably Prologis and BofA have a long working relationship. Usually big public cos like Prologis have an investment bank they work with over time on bond and share offerings.

    It is not unusual for such a relationship to spill over into other business, although my bet is that the BofA guys who work on equity offering for Prologis are completely different guys from the ones involved in this financing.

    Anyhow, why would you assume that Prologis shares will go down in value? You say “shareholders or suckers” will pay” but that assumes a decline in share value.

  3. We are encouraged by this announcement and are hopeful that the Bank, NRG Energy, DOE, and Prologis will look first to financially secure North American suppliers as they start to deploy these systems. This will ensure a more robust financial return to the North American manufacturing and engineering communities while boosting the local economies with installation, operations, and service opportunities.

    Finally, pursuing solar PV projects at this scale will greatly assist in driving down the price per watt of solar accelerating the date of price parity with conventional power systems. We certainly hope this transfers equally to the residential PV market where the industry desperately needs to achieve a system level purchase price to the consumer of $1/w AC, net inverter output per CEC ratings, for a grid-connected 2.5 kW system before ITC or utility incentives.

  4. Grafitti:

    I have no issue and did not say the stock will go down. I cannot trust any bank that took a bailout from taxpayers as they created the problem in the first place. In the long run, as taxpayer I have to ask am I paying for this as I did for the Union pensions at GM. As an investor I am paying for this, Prologis pays nothing. BofA gets a boatload of shares ($) for filing some paperwork and in the end pays nothing. Anyway that how I see it and that is the way it works. The fiat risk for the project in the end falls on us. There is no risk to BofA or Prolgis. Payback and appreciation in a project like this is lost. While energy savings will be significant over the long term, for individual investment purposes is lost. Anyway thats the way I feel. As I said, the project is positive if applied and designed properly.

  5. @Jack. I agree but the equipment needs to be 100% USA made. Otherwise we achieve no economical gain. Legal and illegal migrant workers send their money back home to be spent in their homeland – no issue as they are helping their families survive. Just as we send money for business and products overseas, we lose the economic benefit of it being spent here. Not a isolationist here, but there has to be limits, of which need a balance here and abroad.

  6. Not to rain on your parade, Matt, but your comments aren’t making much sense:

    1) As GraffitiGrammarian says, your claim that “shareholders or suckers” will pay” does appear to imply that stock prices must decline. If they rose or stayed the same, then shareholders would not be ‘paying’ anything.

    2) As far as trusting BofA due to a taxpayer bailout, that is of course your choice – but such choice would seem to be irrelevant, since it has little bearing on the topic of the article.

    3) Taxpayers did not pay for the union pensions at GM. GM has returned all of the taxpayer-funded bailout they received – some 5 years earlier than agreed to. And this point is also off-topic anyway.

    4) Investors always take on risks for every single move that any public company makes. In our capitalistic system, that’s how publically -traded and -owned companies are supposed to operate. If you don’t like the idea of Prologis or BofA making this financial move, then you are free to avoid investing in those companies.

    5) It isn’t even clear what exactly you mean by the remark that “Payback and appreciation in a project like this is lost”. If the project(s) succeed, then BofA and Prologis stand to make profits from those successes. And so would their investors, which provides the reason why many investors are willing to take on those risks.

    6) You describe yourself as not being an isolationist, and your further state that there should be a balance between money spent domestically vs. that spent abroad. But you also state that “the equipment needs to be 100% USA made”. Gee, that’s not much of a ‘balance’ – 100% domestic.

  7. Its about time that the government and the private sector teamed up to save energy and shore up our national security problem with imported oil. I suggest BofA look to put solar panels on every possible foreclosed home they have for sell. The energy saving will be a great selling point.

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