In a move demonstrating exactly how tight U.S. funding for solar is these days, photovoltaic installer Borrego Solar has taken $30 million in equity from Taiwanese cable manufacturer Walsin Lihwa. The money will give the company the boost it needs to branch into selling purchase power agreements.
Basically, it will institute a system where Borrego pays for and retains ownership of the solar equipment it installs for commercial and government clients. It will then be able to charge for the power the panels generate at a fixed rate -- said to be lower than what customers currently pay for utilities -- over the next 20 to 25 years. It used to bring in revenue by installing solar racks on homes and businesses. The company also used to have to partner with third-party financiers -- now it can offer financing options to customers itself, which it says should lower prices.
While the Department of Energy is working hard to stoke the green economy, its new stimulus programs actually make it easier for overseas investors to buy into American cleantech companies. For now, this seems like a good thing. Many project-based companies in the sector have stagnated this year, unable to raise additional project-based capital. Global interest may very well help American cleantech investing back on track.
This is particularly relevant to El Cajon, Calif.-based Borrego, which has a very project-focused strategy set for this next year. In fact, it plans to roll its new $30 million into other debt financing, rebates and government incentives to amass $100 million for multiple projects.
Along with similar company SunRun's announcement of $18 million in venture backing last week, the news seems to indicate an uptick in renewable investing: a real life demonstration of the surge in cleantech investing reported by VentureSource last week (the report even indicated an increase in asset and project-related backing).
In entering the purchasing power agreements business, Borrego will compete with several formidable companies, including Fotowatio's Renewable Ventures and SunEdison. But Borrego says it will be selling electricity at a 5 to 10 percent discount from its rivals. Many clients are particularly interested in these flat-rate purchasing agreements now with cap-and-trade legislation on the table in Congress. If a cap-and-trade system for carbon is successfully put in place, traditional electricity prices will no doubt skyrocket.