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We've heard a lot about Solyndra, the solar panel maker that went bankrupt despite lots of federal subsidies. Well, today, a success story from the solar industry. A solar installation company has teamed up with one of the country's biggest banks. Together, they announced a billion-dollar project to put solar systems on military housing. And as NPR's Elizabeth Shogren reports, they're doing it without the kind of federal help Solyndra got.
ELIZABETH SHOGREN, BYLINE: When SolarCity CEO Lyndon Rive came up with his project to put solar on the rooftops of military housing around the country, he was sure he would need federal backing to get loans for such a big project. His company and the Department of Energy missed a deadline to get that help, but SolarCity and the Bank of America Merrill Lynch didn't give up. Now, they're announcing plans to install solar systems on up to 120,000 military homes.
LYNDON RIVE: It will be the largest residential deployment of solar in American history.
SHOGREN: Rive says SolarCity will install and own the solar systems and sell the electricity to private companies that manage military housing. It's a business model that now dominates the solar industry.
RIVE: We install the system for free, and we sell them electricity. And that electricity is typically about 10 percent less than the current cost of electricity.
SHOGREN: The lender gained confidence that SolarCity was a good bet because of the work it had done on earlier projects. It installed solar systems at an Air Force base in Tucson and is working on a project at the joint Navy-Air Force base Pearl Harbor-Hickam on Hawaii. Rive says by installing lots of solar panels in one area, the company has shown that it can save money and turn solar power into a reliable business.
RIVE: It worked extremely well. It also allowed us as a company to get economies of scale on a concentrated area. There's a lot of inefficiencies when you have to go back and forth to different homes in different communities.
SHOGREN: Simon Muir is a vice president of Lend Lease, the company that manages the housing at both bases.
SIMON MUIR: They've demonstrated that they can get extremely competitive pricing for solar. So who wouldn't do it if you could save money and you get the green benefits of doing that?
SHOGREN: Lend Lease manages military housing at 21 bases around the country. It's planning to do more solar projects with SolarCity and other companies. For decades, one of the biggest obstacles to the solar industry was getting financing.
JONATHAN PLOWE: There really weren't a lot of financing tools available, so it was done one rooftop at a time.
SHOGREN: Jonathan Plowe heads up the new energy team at Bank of America Merrill Lynch. He says the real breakthrough represented by his company's deal with SolarCity is that it puts financing in place for so many installations. It's the first time a project of this scale has been launched without the federal government basically cosigning the loan. Solar projects still get tax credits and other subsidies. Plowe says the Bank of America team plans to do more of these projects.
PLOWE: As the costs of the systems continue to come down and the cost of the capital continues to come down, the industry will be able to continue to grow.
SHOGREN: The solar installation industry in the U.S. has doubled in each of the last two years. Rhone Resch heads up the Solar Energy Industries Association.
RHONE RESCH: The fact that SolarCity is now able to attract money, I think, really demonstrates how mainstream solar has become, how confident investors are in both the technology, its performance and its returns.
SHOGREN: But Mark Bachman, an analyst for the investment banking firm Avian Securities, is more cautious.
MARK BACHMAN: I think it's gaining momentum. I wouldn't call it a breakthrough time in the U.S.
SHOGREN: Bachman says solar still only provides a tiny portion of U.S. electricity and still will need federal subsidies to keep growing. Elizabeth Shogren, NPR News, Washington.
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