The Minneapolis-based bank has now invested $700 million toward renewable energy projects.
U.S. Bancorp said Wednesday that it will partner with a California solar company on a $250 million fund that will finance construction of solar panels for homeowners and businesses.
In exchange for renewable-energy tax credits, Minneapolis-based U.S. Bancorp will help pay to build the panels for customers in 14 states and Washington, D.C. Minnesota is not among those states because SolarCity doesn't do business in the Midwest.
Neither party would say how much of the $250 million investment will come from U.S. Bank. But Darren Van't Hof, director of renewable energy investments for U.S. Bank, said San Mateo, Calif.-based SolarCity is investing some of its own money.
U.S. Bank has now invested $700 million toward renewable energy projects, Van't Hof said, and about 80 percent of that has been for solar power.
Here's how the financing, known as a tax equity fund, works: SolarCity gathers partners such as U.S. Bancorp to invest in the fund. It then uses the money to install rooftop solar panels, leases the panels to customers and pays investors using lease income and federal renewable-energy tax credits.
U.S. Bank will take the tax credits.
Leasing solar panels costs less for consumers than a regular utility bill, both companies said.
SolarCity does business in Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Hawaii, Maryland, Massachusetts, Oregon, New Jersey, New York, Pennsylvania, Texas and Washington. The company generally sticks to states where sunshine is plentiful and utilities are more expensive.
Since power in Minnesota is already relatively cheap, the business case for solar power here doesn't make sense yet, SolarCity spokesman Jonathan Bass said. "We haven't reached that point in Minnesota yet," he said. "But we hope to get there eventually."
The new project is the sixth and largest the bank and solar company have partnered on in the past three years. U.S. Bancorp has done similar projects with solar companies Sungevity, Vivint and Sunrun, which do residential solar panels, and Borrego, which builds mostly commercial solar panels. Solar City builds solar panels for both residential and commercial customers.
The chairman of SolarCity's board is Elon Musk, who runs the electric car company Tesla and the aerospace company SpaceX. In May, SpaceX became the first private company to launch a rocket into orbit and successfully deliver a capsule to the International Space Station.
Musk's cousin Lyndon Rive is founder and chief executive of SolarCity. The private solar company announced in May that it plans to pursue an initial public offering.
Staff writer David Phelps contributed to this report. Adam Belz • 612-673-4405