Driving Solar Growth Through Financing: SolarCity CEO Lyndon Rive (Part 6)

SM: Is there a bottleneck for the scaling of solar power adoption in the US or the world?

LR: In the US there absolutely is. The biggest is financing. Back in 2008 you could establish one $300 million fund and get multiple projects done through that. Those days have come and gone. These days you find yourself establishing a $50 million fund multiple times. You have to do six times the amount of work for the same amount of funds. That is the delay.

In order to get the benefits of solar systems you have to have profits. The number of financial institutions out there that have profits and want to make solar investments has been reduced dramatically.

SM: Why is that?

LR: Because all the other companies are losing money now.

SM: Are all the other companies creating competition which is driving down profitability?

LR: No, they just made bad investments. Morgan Stanley started to lose money. Lehman used to be a big investor and they are now gone. Wachovia used to do this stuff. There are only a handful of banks left which do solar tax investments.

SM: The money has dried up because the companies which had funds no longer have profitability to benefit from the tax incentives.

LR: Exactly. The projects are still there. They have money to give out but they cannot take advantage of the tax credits. There are no profits to shield.

SM: How do you think this is going to change? The banking industry is not healthy right now.

LR: Since the stimulus something has changed which is going to make a big change in solar adoption. [The government] has taken the tax credit and made it a cash grant. You used to get a 30% tax credit on a system. Now the government will just write the check. Banks no longer need to have profits to benefit from solar investments again. This should be in effect in September. It has been approved; it has just taken the Treasury Department a little time to administer the program.

SM: How is this program going to be administered?

LR: That is what is taking so long. One system applies to residential and another to commercial. When the banks buy solar systems they are a commercial entity buying the solar system. They qualify as commercial. It will address their bottleneck of tax equity.

I expect that around November or December the solar market will start opening up in the US again. That will resolve a big constraint in US solar adoption.

SM: What is the total amount of stimulus funding going into this program?

LR: There is no cap, just an expiration date. You must have your system installed by the end of 2010.

This segment is part 6 in the series : Driving Solar Growth Through Financing: SolarCity CEO Lyndon Rive
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