Wall Street banks' attraction towards solar energy seems to
continue. On Wednesday,
Wells Fargo & Company
) announced a further investment of more than $100 million of tax
equity financing over the next 18 months to
) - a leading solar energy provider.
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Wells Fargo plans to invest in distributed generation solar power
projects developed by SunEdison. Since 2007, the banking major
has financed almost 200 utility-scale solar projects throughout
13 U.S. states and Puerto Rico, for an amount worth $950 million.
This has allowed SunEdison to provide clean and cost-effective
energy to its customers.
SunEdison designs its projects according to the terms of a power
purchase agreement (PPA). Its customers buy the energy produced
for a fixed rate as specified in the PPA. Hence, third-party
investors are beneficial to SunEdison as they facilitate the
company to install solar power equipment without requiring
customers to pay upfront costs. Since 2008, SunEdison has
garnered approximately $5 billion in project financing for solar
Recently, Sunrun - a privately held rooftop solar solutions
provider - secured funds worth $630 million from
JPMorgan Chase & Co.
) to acquire and install solar power equipment.
Financing solar installations have become attractive for major
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, as per the terms of the deal.
An acute awareness of the benefits of green energy exists in the
U.S., as evinced 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. Notably, distributed solar alone has
secured almost $1 billion in third-party financing from Wall
Street biggies in the last few days.
Wells Fargo currently carries a Zacks Rank #3 (Hold).
) is a better performing stock, which carries a Zacks Rank #2