Financial services firm Morgan Stanley has pledged $200 million in financing for solar power projects hosted by Recurrent Energy, a San Francisco-based provider of solar energy to institutional property owners.
The solar project fund will provide $100 million in financing for projects next year and an additional $100 million in 2009, according to Recurrent.
"Morgan Stanley is a leader in the industry and their commitment to financing renewable energy has been clear from the start," Recurrent Founder and CEO Arno Harris said in a statement. "We look forward to putting this new fund to work quickly to help our clients transform empty rooftops into value-generating, sustainable assets."
Recurrent, which raised an initial $10 million in funding in March, began negotiating with Morgan Stanley earlier this year, Harris said in his blog. The firm launched in 2006 and has yet to publicly disclose any of its clients, but Harris wrote that with the fund in place, Recurrent "can offer our customers and partners the added certainty of knowing we have capital lined up ... with a leading investment bank."
The firm is one of several new groups offering solar energy via purchase power agreement (PPA), an innovative financing platform allowing customers to tap solar power without a costly investment.
Under Harris' version of the PPA, which he calls 'Solar as a Service', Recurrent installs, operates and maintains solar panels on the customer's rooftop, selling the renewable energy to the user at prices guaranteed to be competitively priced with utility rates.
Harris has targeted owners of large real estate portfolios, such as institutional investors and REITs, where his Solar as a Service model could operate with the greatest efficiency. Recurrent estimates that these real estate owners possess about 8.5 billion square feet of U.S. rooftop space, more than half of which is suitable for photovoltaic installations.
The PPA structure is gaining ground both among solar providers -- which profit from the sale of the energy and frequently have much of their expenses offset by government incentives -- and among customers, who benefit from on-site solar energy without having to buy or maintain the hardware.
MMA Renewable Ventures, a solar energy provider also offering a PPA platform, has received equity investments from Wells Fargo & Co., Citibank and John Hancock Financial Services. It has completed projects for Estee Lauder and Fetzer Vineyards and is currently installing a solar system for apparel chain Gap Inc.
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source: costar.com
