Wells Fargo has agreed to finance up to $100 million of solar energy projects to be built and maintained by SunPower.

The deal, announced Monday, would fund projects for businesses, universities or government agencies in the United States, SunPower said. It also came at a time when project financing is still hard to come by, though solar companies are hoping to see an improvement in the second half of this year.

As the investor, Wells Fargo would own the systems while San Jose, Calif.-based SunPower would design, build and operate them. Customers would sign long-term power purchase agreements with SunPower to pay for using solar electricity.

The investment would entitle the bank to get a 30 percent federal tax credit, or it could opt to receive the equivalent in grants from the U.S. Department of Treasury. Wells Fargo declined to say which option it would choose.

Congress made it possible to get grants instead of the tax credit in the stimulus package it approved in February this year. Lawmakers wanted to spur solar energy development, which had largely been stalled because of the credit crunch.

The grants are meant to allow project developers quicker access to financing. But the treasury department has yet to publish the rules and application form for the program, prompting complaints from project developers (see Solar Companies Fear Delays as Feds Work Slow Magic). It's expected to post the rules next month.

SunPower already is carrying out two projects that are being financed by this Wells Fargo fund. It's building a 1.1-megawatt system for the University of California at Merced and a 1-megawatt system for the Western Riverside County Regional Wastewater Authority. SunPower plan to complete both projects by the end of this year.

Power purchase agreements have become a popular way for businesses and governments to get the cost and publicity benefits of using solar electricity without having to fork over the expensive upfront costs of installing and owning them. A 1-megawatt system, in general, could cost roughly $7 million to install. SunPower said it pioneered the PPA approach. UPDATE: Gordon Johnson, head of alternative energy research at Hapoalim Securities, said in a note Tuesday that the Wells Fargo financing could support 25 megawatts of projects -- this seems to reflect the declining costs of materials that has taken place since the credit crunch hit last fall. 

The PPA model also has migrated to the residential solar market. San Francisco-based SunRun, for example, offers PPAs through installers.

SolarCity, an installer, offers a lease program to both residential customers. The Foster City, Calif.-based company has announced two funds so far this year to finance both residential and commercial projects.

The last time SunPower announced a financing fund was back in January 2008, when GE agreed to back five projects in California totaling 8 megawatts. The companies didn't disclose the amount for the fund.

Wells Fargo has been an active investor in solar projects since 2006, said company spokeswoman Stephanie Rico. It has bankrolled projects carried out by MMA Renewables and SunEdison.

Image of a SunPower installation in Florida via SunPower.

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