BORREGO SOLAR SYSTEMS INC.
CEO: Mike Hall.
Financial information: Not disclosed.
No. of local employees: 80.
Investors: 70 percent owned by Walsin Lihwa Corp. of Taiwan.
Headquarters: El Cajon.
Year founded: 1980.
Company description: Designs and installs commercial-size solar power systems for businesses, municipalities and schools.
Key factors for success: Leveraging the use of power purchase agreements, or PPAs, to aggressively underwrite more new commercial-scale solar energy projects, which will be announced in 2012.
When you’re hot, you’re hot, especially in the now sizzling industrial-grade solar energy design and installation business.
El Cajon’s Borrego Solar Systems Inc. said June 21 that it has inked a deal with East West Bancorp Inc. and U.S. Bancorp to finance three new photovoltaic systems, one in Northern California, in Massachusetts and in a New Jersey suburb of New York City.
The latest round of financing pushes Borrego past the $100 million mark with the two banks, according to Chief Financial Officer Bill Bush.
“This is the third fund that we’ve closed with institutional investors, which represents more than $100 million in assisted financing for solar in the marketplace,” said Bush. “This represents a major milestone for us. And we were able to demonstrate that we were able to get projects financed not just in California, but in other important solar markets.”
He said the financing also represents a “pretty substantial increase” to 8.5 megawatts from 5.5 megawatts. “It really showcases us pretty positively,” he said.
Bush said the company had arranged $56 million in financing with the two banks in two previous deals, including solar projects involving the San Diego Community College District, San Diego County Water Authority and the nonprofit Madera Community Hospital.
Installations in the Pipeline
He said the most recent financing arrangement will underwrite the installation of 9 megawatts of projects, including projects in the City of Easthampton, Mass., the Archdiocese of Newark, N.J., Edwards Air Force Base and the County of Santa Clara in Silicon Valley.
One megawatt is sufficient to power the electrical needs of about 1,000 homes, though the actual number of homes that can be so supplied varies depending on time of day and the season.
U.S. Bancorp is the parent of U.S. Bank, the fifth largest commercial bank in the United States. East West Bancorp is the parent of Pasadena-based East West Bank, with subsidiaries in China, Hong Kong and Taiwan.
Bush said the company has completed more than 1,000 solar power installations since the 1980s, totaling more than 35 megawatts of power.
Borrego helps customers finance projects through solar power purchase agreements, or PPAs, which allow them to build projects without paying the capital costs upfront. Borrego installs and operates the systems, and then sells the power to the customer at a fixed rate over a period of years.
The banks benefit from 30 percent tax incentives for funding projects, which helps to boost the bottom line.
Investment Opportunity
“Borrego Solar has continued to demonstrate itself as a bankable investment partner,” said Darren Van’t Hof, director of renewable energy investments for U.S. Bank, in a written news release. “Looking at Borrego’s diverse project pipeline, we could not be more confident in the success of this new round of financing.”
“Our goal is to have two to three of these funds that will close throughout the year,” said Bush. “Our goal is to grow, and to grow pretty aggressively over the next year and beyond.”
Tom York is a contributing editor for the San Diego Business Journal.