US Army, SolarCity Team Up for Billion-Dollar Solar Rooftop Project

US Army, SolarCity Team Up for Billion-Dollar Solar Rooftop Project

Image courtesy of U.S. Army Environmental Command

The U.S. Army just clinched a deal that will move the military branch closer to its goal of using 25 percent renewable energy by 2025.

The Army will use private financing to install rooftop solar installations on as many as 160,000 privatized military residences in 33 states. To put this in perspective, industry research suggests there are about 166,000 PV installations in the U.S., so the Army deal could just about double that.

In terms of output, this plan, valued at more than $1 billion, will deliver a total of 371 megawatts of solar power to military housing.

Here are some of the major players behind the deal: SolarCity will install, own and operate the rooftop solar arrays at up to 124 military bases. In a cool twist, the company will put veterans and military family members to work to install and maintain the systems. It's a coup for the company because the deal gives them a guaranteed customer in the military, and probably allows SolarCity to sell excess power back to the grid.

USRG Renewable Finance, the debt financing arm of US Renewable Group, will lend $344 million to SolarCity for the project, in partnership with BofA Merrill Lynch. Up to 80 percent of the loan will be guaranteed by the U.S. Department of Energy's Loan Programs Office. The transaction will close between now and Sept. 30, according to Tim Newell, Managing Director of USRG Renewable Finance. Work for the project has already begun at Hickam Air Force Base in Hawaii.

"This is the first time that long-term debt has been used to finance a residential distributed solar generation project of this scale," Newell said. "This is the largest residential solar project in U.S. history."

He noted that it took about 30 years to grow residential rooftop solar installations to roughly 166,000, but "this project will double that in the next five years."

The Department of Defense has moved quickly in recent years to improve the military's energy independence, which it views as a security issue. Another recent announcement includes the Navy's collaboration with the DOE and U.S. Department of Agriculture to invest $510 million for the development of biofuels.

You also might recall that the Army announced just last month that it was starting the Energy Initiatives Office Task Force to specifically work with the private sector to identify and invest in large-scale renewable projects housed on Army property. To meet its 2025 goal, the Army estimates it will take roughly $7.1 billion in investments over the next 10 years.

The EIO wasn't scheduled to be operational until Monday, but the SolarCity-USRG deal seems like the exact type of project it was designed to foster. Expect to see more massive renewable projects being announced by the Army in the coming months and years.

[Editor's note: This is an updated version that includes commentary from USRG's Tim Newell.]

Image of Arizona Army National Guard's Eco Building courtesy of U.S. Army Environmental Command.