U.S. Bank and East West Bank to finance $47 million in Borrego Solar projects

Borrego Solar projectsSome people must not realize that it’s harder to attract financing for solar projects these days. At least that seems to be the case with Borrego Solar Systems, Inc. The company just secured a $47 million fund from U.S. Bancorp and East West Bancorp to support more than 10 megawatts of projects.

The projects are being built in California and Massachusetts—including the largest project of its kind to date in Massachusetts, according to Borrego.

The company will use the fund to build 6 megawatts (MW) of PV systems in California. Those include 10 projects throughout three school districts. Borrego will build two projects in Massachusetts, including a 4.7 megawatt project that will be the largest of its kind in the state.

The projects are safe-harbored under the 1603 Treasury Grant Program which officially ended on Dec. 31, according to Bill Bush, Borrego’s chief financial officer. That means that the projects being built are eligible to recoup the 30 percent investment tax credit (ITC) following their completion, rather than recoup the credit over a number of years.

“Some investors prefer the ITC over the grant,” Bush said. “Though we have focused on the grant, we expect that given our pipeline and history, we will be able to finance projects using either approach.”

While third-party financing companies like SolarCity and Sungevity announced big funds with banks and other investors like Google Inc. last year to support projects, it’s different to establish such funds for commercial projects, according to Bush.

“I think that most of the larger announcements have been with residential solar, which I believe uses a FICO-based underwriting approach whereby locations are qualified based on a defined set of criteria with a less complicated set of documents,” he said. “Commercial projects have a more complicated underwriting process, and investors typically have had a harder time approving a block of funds.”

In all, Borrego has raised $150 million in financing to support solar projects, according to Bush. That includes a previous $46 million round from the two banks announced last June.