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Top financial services company Citi has made its first investment in residential solar power via a $40 million fund to finance residential solar projects in 2011 for SolarCity.

The fund will be used to finance solar leases, bringing SolarCity’s total project financing to more than $700 million, the company says. Solar leasing is a fast-growing and popular model among solar startups in which financing deals with banks like Citi allow homeowners to lease solar panels and pay for the cost of solar generated, which can come out to less than what traditional utilities charge. In fact, fuel cell company Bloom Energy recently announced a similar program for electricity generated by its fuel cells.

Residential solar services companies have done well lately in raising cash and growing their services. Solar leasing startup Sungevity recently raised a $15 million round and is also eying the East Coast for expansion opportunities; solar financing and installation network Solar Universe announced this month it had raised $7 million and hired away an executive from SolarCity.

SolarCity is one of the top companies in the segment, and it’s been expanding this year with the acquisition of an East Coast installation company and expansion into Maryland and the District of Columbia. The company has 10,000 projects completed or underway in the country.

“We expect the partnership with Citi to be the first phase of a relationship that will significantly increase residential solar adoption in the U.S.,” said Benjamin Cook, SolarCity’s vice president of project finance in a statement.

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