Banks, Investors Chip In for Public Solar Projects

BERKELEY, Calif. — Borrego Solar Systems, a designer and installer of grid-tied commercial and public sector solar power systems, announced hat it closed its second fund with US Bank and East West Bank to finance six solar energy projects worth $36 million. Two of the fund’s main projects are a 1.2-megawatt system at Madera Community Hospital north of Fresno, California and a 1.8-megawatt system at the San Diego County Water Authority.

The projects are being financed through a combination of funds from the two banks and Borrego’s Power Purchase Agreement, which was launched in 2009 by Borrego investor Walsin Lihwa, an international manufacturer of high tech products based in Taiwan.

Last July, Borrego announced its first solar fund with US Bank and East West Bank for $20 million to finance a 2.8 megawatt solar installation at the San Diego Community College District, the first project financed by the company’s PPA.

Under the terms of the agreements, Borrego — based in Berkeley, Calif. — will build, operate and maintain the solar installations and sell the energy to the hosts at lower rates than those charged by California utility provider Pacific Gas & Electric Co. 

Borrego chief financial officer Bill Bush says the company’s PPA benefits public agencies because it locks in lower electricity rates while eliminating their need to make a capital outlay for the system because Borrego is both the builder and owner. 



“They get the benefit of capital improvement on their site, fixed electricity rates over a long period of time — as much as 20 percent — they have the certainty of knowing what they will be paying over a long period of time and the rates are substantially lower than PG&E,” says Bush. 



Public agencies have the option of purchasing the solar installations at the end of the contract for a lower price than they would otherwise pay, Bush added.

SDCWA Special Projects Manager Cheryll Stewart credits Borrego’s PPA with helping the water agency save money while going solar.

“If we had put [the solar project] in our capital improvement program it would have required coming up with $10 million,” says Stewart. “We were looking for a way to save money without a cash outlay. Our intent was that we need to save money; we wanted to see a definite positive cash flow in the first year for all three sites.”

Based on current energy costs, the SDCWA estimates it will save $1.7 million over the span of its 20-year agreement with Borrego.

With federal and state governments providing tax breaks to encourage public entities to go solar, power purchase agreements are catching on as a means of funding the switch.

“We are seeing quite a bit of interest in [PPAs] particularly for this budget strapped time where agencies are looking for ways to reduce operating expenses,” says Bush.

Investors are also becoming increasingly aware of the benefits of PPAs and entering the market.

 “Overall, the bank has identified the renewable space as part of its green initiative,” says Hank Lee, vice president of East West Bank. “It is actively looking to be more involved in financial green transactions.”

Lee says the bank was looking for opportunities to enter the solar market and Borrego became its partner of choice for several reasons. “They are a nice fit for us because [Borrego’s] customers are customers that we would like to be a part of the bank,” says Lee. “They have quite a bit of experience and history which was good to see.

“Second, with their geography, in terms of their mark, it is a nice overlap with the bank’s footprint —  Southern California and Massachusetts.”

Lee says East West anticipates working with Borrego on additional projects in the future. “We’re very happy with our partnership and we’d like to continue.”

Borrego is installing the solar systems on three SDCWA sites in California: its headquarters in the Kearny Mesa neighborhood of San Diego, its Fred A. Heilbron Operations Center in Escondido and its Twin Oaks Valley Water Treatment Plant north of San Marcos. 

The installations at headquarters and Escondido will generate 0.7 megawatts of electricity and supply 50 to 60 percent of each site’s power needs. The Twin Oaks installation will generate 1 megawatt of electricity and supply 20 to 30 percent of the facility’s power needs. Together they will generate approximately 2.8 million kilowatt hours of electricity every year — enough to power 30,000 homes.

The systems will be installed in the parking lots and on the roofs of the headquarters and Escondido sites and on ground mounts at the Twin Oaks facility. 


All three SDCWA systems are expected to be complete by June 2011.

Borrego estimates the systems at the SDCWA and Madera Community Hospital will reduce carbon dioxide emissions by more than 70 million pounds over the next twenty years. 


Borrego’s solar system at the San Diego Community College District includes nine solar arrays at six campus locations. The district will buy the electricity from Borrego at rates 18 percent cheaper than those currently charged by San Diego Gas & Electric for an estimated savings of $110,000 per year.