The agreement, for which no value was disclosed, allows U.S. Bancorp Community Development Corp., a unit of U.
S. Bancorp, to take advantage of tax breaks including a solar tax credit.
In return, the bank pays for the purchase and installation of solar power by SolarCity, which markets and maintains the systems. Homeowners and businesses purchase the electricity generated from their roofs.
"We are able to offer a home owner or a business owner a solar financing solution that costs them less than if they bought the same amount of electricity from the utility," said Lyndon Rive, chief executive of SolarCity, from company headquarters in Foster City, Calif.
Homeowners also may choose to pay the cost of the installation, which can run to $20,000 and has a payback period for eight to 10 years, Rive said.
Darren Van't Hof, vice president of the U.S. Bancorp unit said in a telephone interview from St. Louis that the two companies have created a tax equity fund which finances the solar lease plan.
The joint fund reaps the benefits of the tax breaks, sharing the revenue stream between the bank and SolarCity, he said.
The company takes care of maintenance for 15 years, after which a homeowner can renew the plan, upgrade, buy the system or have it removed, Rive said.
Rive said the company already has a six-month backlog and the agreement, signed a few days ago, will allow it to whittle away that backlog and sell more systems.
"It is allowing us to hire an additional 100 installers," increasing the force to 300, he said.
Rive said he expects that the company will sell 3,000 systems this year, and that is only the beginning. He said the company's income tripled last year and he sees huge growth in the coming eight years, which is how long Congress designed the tax break to last.
"We expect to deploy hundreds of thousands of systems over this time period," he said.
The privately held company is three years old and has received $56 million in venture capital backing, $25 million from solar panel producer First Solar. The remainder comes from entrepreneur Elon Musk and from venture capital firm Draper Fisher Jurvetson.
SolarCity says it is the largest residential installer of solar-powered systems in the United States.