Morgan Stanley Backs $300 Million Rooftop Solar Investment Fund
May 03 2012 - 08:29AM
Dow Jones News
Morgan Stanley (MS) has put together a $300 million fund to
invest in rooftop solar-power systems to be installed on U.S. homes
in a deal with two clean-energy firms and Zions Bancorp (ZION).
The fund will support about 8,000 residential rooftop solar
systems, which will be installed by various solar-panel installers
through contracts arranged by Clean Power Finance, a solar-power
financing firm backed by Google Inc. (GOOG).
Zions Bancorp will provide debt financing for the fund.
Developing and owning solar-panel systems have become far more
profitable than making the equipment. 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.
In California, Arizona, New Jersey and other states that have
solar incentives, rooftop solar projects can have an advantage over
large solar farms because they compete against retail electricity
prices. Those prices tend to be much higher than wholesale power
prices that utilities pay for electricity from solar farms and
other power plants.
Manufacturers of solar panels have seen their profits and stock
prices decline, as panel prices have fallen amid a global supply
glut. Those who build and buy solar-panel systems, however, enjoy
lower prices for panels and other components, while taking
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.
"Companies in the downstream part of the [solar industry] are
seeing their businesses flourish," said Kristian Hanelt, a senior
vice president at Clean Power Finance in San Francisco.
Clean Power Finance has an electronic platform with sales
software and other online tools that solar-panel installers use to
sell solar systems to customers.
Solar-panel installers and developers also sign long-term
contracts with homeowners to have solar-panel generators installed
on their roofs. The homeowners then pay a set amount per month in
lieu of their utility bill, which is usually less than what they
would pay their utility. The solar systems are then bundled
together and sold to investors.
In the deal with Morgan Stanley, Clean Power Finance and solar
developer Main Street Power will market the homeowner contracts,
handle the net-metering agreements with utilities and manage the
rooftop solar systems.
The solar systems will be installed on homes in California and
Arizona initially, with homes in others states to be added later,
said Hanelt.
-By Cassandra Sweet, Dow Jones Newswires; 415-439-6468;
cassandra.sweet@dowjones.com
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