US Bancorp Backs $250 Million Solar Fund

Date : 06/13/2012 @ 6:10PM
Source : Dow Jones News
Stock : U.S. Bancorp (USB)
Quote : 52.79  0.0 (0.00%) @ 4:00AM

US Bancorp Backs $250 Million Solar Fund

US Bancorp (NYSE:USB)
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By Cassandra Sweet

SAN FRANCISCO--U.S. Bancorp (USB) said Wednesday it would invest in a $250 million fund to finance rooftop solar-power systems to be installed on U.S. homes, businesses and government buildings.

The fund will support solar-power systems to be installed by SolarCity Corp., of San Mateo, Calif., and is part of the bank's plan to invest about $440 million in renewable-energy projects this year.

The investment returns from solar-power projects "are adequate and the reliability has proven out over multiple years, so we feel better and better that it's a good use of capital," said Darren Van't Hof, director of renewable-energy investments at the bank's U.S. Bank unit.

The $250 million fund is the sixth one the bank has arranged with SolarCity to invest in rooftop solar power. The fund could include other investors, besides U.S. Bancorp, Mr. Van't Hof said. He declined to say how much of the fund his bank would be providing.

Some of the solar-power systems already have been installed and most of the rest are likely to be completed by the end of this year, said Benjamin Cook, SolarCity's vice president of structured finance.

Developing and owning solar-panel systems have become far more profitable than making the equipment. That's because investors can take advantage of federal and state subsidies, such as tax credits, while prices for solar panels have plunged over the last two years.

Manufacturers of solar panels have seen their profits and stock prices decline over the last year, as panel prices have fallen amid a global supply glut. Companies that build and buy solar-panel systems, however, have benefited from the lower prices and have taken advantage of government subsidies, including a federal tax credit equal to 30% of the cost of each system and fees that utilities in several states are required to pay for rooftop solar power through net-metering programs.

Rooftop solar projects have an advantage over large solar farms because they compete against retail electricity prices that utilities charge their customers. Those prices tend to be much higher than wholesale power prices that utilities pay for electricity from solar farms and other power plants.

Write to Cassandra Sweet at Cassandra.Sweet@dowjones.com

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