(Reuters) - Top U.S. solar installer SolarCity Corp on Thursday said it has partnered with Bank of America on a $200 million fund that will enable smaller investors such as regional banks to finance the company's residential solar systems.
The move is aimed at bringing new capital into the fast-growing rooftop solar industry and ultimately reducing the cost of that capital, SolarCity's chief executive, Lyndon Rive, said.
"That will bring many more investors and then more competition, and then that will reduce the cost," Rive said in an interview.
SolarCity and other solar financing companies for years have raised funds of $100 million or more to finance their rooftop systems from major corporations such as Google and U.S. Bancorp. These so-called tax equity funds allow the companies to claim the lucrative federal tax credits for solar energy systems. The funds generate returns of between 8 and 10 percent.
Homeowners benefit by avoiding the hefty upfront cost of a solar system in favor of low monthly payments for about 20 years.
SolarCity's new fund is intended to attract investors such as regional banks or smaller corporations that may only be able to contribute $20 million to $25 million.
Bank of America will serve as the administrator of the fund and will provide whatever capital is needed to reach $200 million, Rive said, adding that he hopes the program is the first of many like it.
"We will deploy that $200 million over the next year, but my goal is to get that to become multiple billions," Rive said.
Reporting by Nichola Groom; Editing by Leslie Adler