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The deal will be financed with a combination of debt and equity from Google and SunTap Energy RE LLC, a new venture formed by KKR to invest in solar projects in the United States. KKR committed a $95 million line of equity to establish SunTap, a part of which will be drawn for this investment.
The deal marks Google’s first investment in utility-scale U.S. solar projects and brings the technology giant’s total investment in renewable energy to more than $915 million, across the world. Three of the four projects will be complete early next year and the fourth will come online later in the year, the companies said in a joint statement.
The facilities will provide 88 MW power to Sacramento Municipal Utility District, and are expected to generate about 160,000,000 kWh in their first year of operation—enough to power more than 13,000 average U.S. homes.
Google said in late 2007 it would invest hundreds of millions of dollars in solar, wind and geothermal technologies to help make renewables cost competitive with coal.
Prices for solar panels have fallen more than 40 percent this year, pushing the cost to install the renewable energy systems to their cheapest levels ever. But solar panel makers have struggled as the price decline eroded profit margins for the nascent industry, driving share prices across the sector sharply lower.
Solar installations in the United States have reached record levels this year, with more than 1,000 MW installed through the first nine months of the year, about equal to the output of a large nuclear reactor.
Energy company TransCanada Corp. also announced a deal to buy solar a power project, its first deal in the solar sector. The company said it would pay $470 million to Canadian Solar, which will build nine projects in Ontario. Solar plants in that province receive a “feed-in tariff” that guarantees a higher-than-market price for the electricity produced.
The two deals come just days after billionaire Warren Buffett made his second major purchase in the sector. Buffett’s power company, MidAmerican Energy Holdings, said it would buy a 49 percent stake in the 290 MW Agua Caliente plant in Arizona from NRG Energy. That followed MidAmerican’s purchase a week earlier of the 550 MW Topaz solar project from First Solar, which is also building the Agua Caliente plant.
(Matt Daily is a correspondent for Reuters in New York; additional reporting by Aftab Ahmed, Vaishnavi Bala and Supantha Mukherjee.)