Solar power developer SolarCity and Bank of America Merrill Lynch will go ahead with a plan to build more than $1 billion in new solar projects on military housing, despite their failure to win a U.S. loan guarantee.
The project, named "SolarStrong," aims to put about 300 megawatts of solar generation on 120,000 military housing units over five years.
That figure was scaled back from the 160,000 installations originally targeted under the project that had received initial approvals for a $275 million loan guarantee from the U.S. Department of Energy.
But the companies failed to win final approval for the project and SolarCity blamed increased paperwork that resulted from a Congressional investigation into the DOE funding.
Congressional Republicans put the DOE under scrutiny after solar maker Solyndra collapsed into bankruptcy, despite winning $535 million in government funding.
Lyndon Rive, CEO of SolarCity, said, although the project failed to meet the end-September Energy Department deadline, the rigorous process in creating and submitting the DOE application actually helped the partners make it viable for debt financing.
Under the new pact, Bank of America will finance the debt portion of the project, while SolarCity will create equity funds that qualify for a tax renewable energy tax break.
"We found that our capabilities had advanced so dramatically from where the market was a year ago, we were able to keep going," Jonathan Plowe, head of new energy for Bank of America, told Reuters.
"What we've done here is create a financing model that can make distributed solar affordable on a huge scale without a guarantee from the federal government."
Private equity firm US Renewables Group (USRG) served as financial advisor for SolarStrong.
SolarCity previously received investments totaling $280 million from Google Inc to help fund its residential solar lease program.
(Reporting by Matt Daily; editing by Andre Grenon)