Google Inc. is making its largest bet yet on renewable energy, a $300 million investment to support at least 25,000 SolarCity Corp. rooftop power plants.
Google is contributing to a SolarCity fund valued at $750 million, the largest ever created for residential solar, the San Mateo, California-based solar panel installer said Thursday in a statement.
SolarCity is currently building North America’s largest solar panel factory on South Park Avenue in Buffalo.
Google has now committed more than $1.8 billion to renewable energy projects, including wind and solar farms on three continents. This deal, which may have a return as high as 8 percent, is a sign that technology companies can take advantage of investment formats once reserved only for banks.
“Hopefully this will lead other corporations to invest in renewable energy,” SolarCity Chief Executive Officer Lyndon Rive said in a phone interview.
The deal reflects the success of renewable energy companies in tapping into a broader pool of investors with financial products that emerged in the past three years either paying dividends or sheltering cash. Those helped boost investment in clean-energy 16 percent to a record $310 billion last year, according to data compiled by Bloomberg.
The Google deal is structured as a tax-equity transaction, meaning the web search developer gets tax breaks that flow from solar systems financed by the fund. Earlier this week, First Solar Inc. and SunPower Corp. said they’d form a “yieldco,” a business model that channels income from operating wind and solar farms into dividends for investors.
Renewable-energy projects are entitled to various tax benefits, including a credit for 30 percent of the installed cost of a solar power system. Unprofitable companies, such as SolarCity, often can’t use the credits and provide them instead to tax-equity investors