Renewable energy is hot with technology giants.
Google continues to invest in renewable energy, announcing Thursday it has invested $300 million in a $750 million SolarCity fund to finance residential solar projects. While Google has put over $1 billion into clean energy projects over the years, the commitment to the SolarCity fund is Google’s largest to date and hte entire fund will be the largest one ever created for residential solar projects.
It means ‘roughly’ 25,000 new solar households and about 500 megawatts of new capacity, SolarCity spokesperson Jonathan Bass said in an interview. “Corporations are starting to realize the importance of using clean energy,” SolarCity chief executive Lyndon Rive said. “Historically the companies that have financed solar deployment have been the big financial institutions and we’ve seen the movement in the sector of tech companies getting into the space and helping to transform a dirty infrastructure to a clean infrastructure.”
The deal shows the momentum behind the booming solar panel industry in the US Solar energy represented over a third of all new electricity in the U.S in 2014 and that could grow to 40% in 2015, which would be a new record. The solar industry in now a major U.S employer, employing twice as many workers as the coal industry; SolarCity employs more workers in California than the state’s three large utilities combined, said SolarCity CEO Lyndon Rive at the ARPA-E Summit earlier this month.
SolarCity’s new fund will be used to cover the cost of installing solar systems on homes in 15 states. SolarCity generally installs the systems at no charge to customers and then charge the residents slightly less per month for the energy than they’d pay their traditional utility.
This type of solar-as-service deal has transformed the solar energy industry and opened up solar energy for tens of thousands of people that would not previously been able to afford. By the end of 2014 SolarCity, the largest installer in the U.S., had installed a cumulative 1 GW of solar panels on its customers rooftops, and the company plans to install another 1 GW within 2015. A gigawatt is the size of a large natural gas, coal or nuclear plant.
Google wants to invest money into funds like SolarCity’s because it can provide a return (8 to 12 percent) on the investment. The deals with homeowners tend to generate pretty reliable revenue over time because homeowners — particularly the kind getting solar installed — tend to pay their utilities. But because these financing deals are becoming more mainstream as solar becomes more of a commodity, the returns have been slipping in recent years.