Wall Street's major banks continue investing in the clean
energy sector, with
The Goldman Sachs Group, Inc.
) the latest to jump on the bandwagon. Goldman entered into a
deal to finance approximately 110 megawatts (MW) rooftop solar
power generators of Calif.-based
). The combined lease financing agreement for homeowners'
rooftops is worth $500 million, and is the biggest deal to be
announced in the U.S.
The agreement began in 2012 and extended as per its initial
terms, to April-end. The deal has already helped achieve 26 MW of
solar generation. Further, it is expected to generate an
additional 158 MW as of May 10, 2013.
The agreement is consistent with Goldman's target of investing
$40 billion in renewable energy over the next 10 years. The
initiative was taken to mark the company's awareness of
environment sustainability and to support the development and
promotion of renewable energy as well as clean technology.
An acute awareness of the benefits of green energy exists in the
U.S., reflected in the rising demand for rooftop panels from
homeowners and businesses in recent times. Consequently,
financial markets have recognized renewable energy as an
immensely valuable asset.
Goldman's deal with SolarCity has formed an attractive financing
alternative to further reduce costs on solar projects. The
majority of SolarCity's customers choose to rent a rooftop
photovoltaic array rather than shell out large sums of money to
purchase solar panels. The deal thus makes it easier for
homeowners and business organizations to install solar systems in
their buildings and thereafter pay a monthly fee, rather than
doling out a hefty down payment.
Among other global banks,
) have also been involved in deals with SolarCity. Financing
solar installations is attractive for investors like banks as
they enjoy tax rebates, including a solar tax credit. The federal
tax credit is equivalent to 30% of a project's cost. Moreover, at
times, banks receive a fraction of the homeowners' lease
payments, according to the terms of the deal.
Through this innovative transaction, Goldman will likely change
the dynamics of distributed solar generation, produce a
significant source of clean energy and generate ample jobs across
Goldman currently carries a Zacks Rank #2 (Buy).
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