San Jose, CA-based solar manufacturer SunPower Corp. (SPWR) and Google Inc. (GOOG) have teamed up to form a $250 million fund to help homeowners across the U.S. to go solar.
This pact is essentially aimed at financing residential solar system installations that SunPower will then lease out to homeowners. Google has committed to invest $100 million, while SunPower will invest $150 million in the plan.
This will definitely give a boost to SunPower’s residential leasing program, launched in 2011. Through this program SunPower has gained significant traction in the U.S. solar rooftop installation market. This program enables the company to receive tax benefit under the Investment Tax Credit structure, which aims at promoting solar photovoltaic (PV.V) installations.
In a win-win deal, the leasing program helps customers to reduce their carbon footprint while avoiding bulky upfront payments. SunPower on its part gains significant top-line visibility.
SunPower already had more than 20,000 lease customers running under this program for 20 years. With this new partnership, SunPower expects to add thousands more to this plan.
Residential solar installation is now a sizzling story. This market even outpaced the commercial and utility segments last year and has already started to attract more conventional electric power companies that produce power mostly from coal and natural gas.
Meanwhile, this deal proves yet again Google’s commitment to advancing green power. The financial assistance to SunPower marks the Internet giant’s 16th renewable energy investment and the 3rd in residential rooftop solar. The search giant has invested more than $1 billion in renewable projects throughout the world.
In the past, Google has invested in solar leasing ventures with companies like SolarCity Corp. (SCTY) and Clean Power Finance. Recently, Google signed a contract with MidAmerican Energy to buy up to 407 megawatts of wind energy in Iowa.
The solar industry rallied in 2013 following a difficult period since 2011. The U.S. Energy Information Administration (EIA) estimates that U.S solar demand increased more than 32% in 2013. For 2014, the EIA projects that U.S. solar energy consumption will rise by roughly 35%. The expected increase in demand is likely to fuel top-line growth at the solar manufacturers.
Also, countries worldwide are increasingly relying on solar power to generate clean energy. Stringent environmental legislations on greenhouse gas emissions have also proved to be a boon for the solar sector.
SunPower, a Zacks Rank #2 (Buy) stock, is set to report its first quarter earnings today before the opening bell. The Zacks Consensus Estimate is pegged at 32 cents a share.
Other stocks worth considering in the solar industry include Canadian Solar Inc. (CSIQ), sporting a Zacks Rank #1 (Strong Buy).
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