The bank is one of the original lenders for a $344 million loan for the SolarStrong project that was on track to be guaranteed by the Energy Department.
But SolarCity, which has headquarters in San Mateo, Calif., said Sept. 23 that it wasn't able to finalize the deal to meet the Energy Department's Sept. 30 loan guarantee program deadline. The company attributed the delay to more stringent requirements in the wake of the collapse of solar panel company Solyndra, which had received a $535 million loan guarantee.
"We think this is another huge leap forward for distributed solar generation," said Jonathan Plowe, Bank of America Merrill Lynch's head of new energy and infrastructure solutions, Forbes reports.
"The reason is that we have created a financing model that can make solar affordable on a huge scale without the guarantee of a loan from the federal government."
As a result of the Department of Energy's scrapping SolarCity's loan guarantee application, the SolarStrong project was downsized to 120,000 residential photovoltaic rooftop systems from the original plan of as many as 160,000 systems, with 300 megawatts of generating capacity instead of 371 megawatts.
SolarStrong will still benefit from a 30 percent federal tax subsidy that will last until 2016.
"BofA Merrill never wavered when the loan guarantee wasn't finalized and worked with us to create a financing structure that works without it," said SolarCity Chief Executive Officer Lyndon Rive.
The SolarStrong deal follows Bank of America's financing of NRG Energy's Project Amp, a 733-megawatt project to install solar panels on commercial buildings in 28 states.
"We had developed a platform we used for Project Amp," said Plowe. "We had the documentation ready to go and the capital structure that was an optimal blend of debt and equity."
SolarCity has completed about 17,000 installations not affiliated with the SolarStrong plan.
"SolarStrong makes affordable clean energy available on a much greater scale. This is uncharted territory for residential solar," Rive said. "The fact that SolarStrong can move forward without a federal loan guarantee is a clear indication that long-term incentives such as the investment tax credit are working."
SolarCity said it expects the project to create thousands of full-time and temporary jobs and it hopes to hire U.S. veterans and military family members to fill the positions.