[C]ash grants created by the federal stimulus law…are based on the underlying value of the solar-power equipment and function like rebates for installers such as SolarCity.SolarCity offers homeowners solar-panel installations, typically through a leasing program that involves a discounted up-front payment followed by a preset number of monthly payments. The company pays for [installation] with help from funds provided by system investors like U.S. Bancorp and Google Inc.The investors earn a return through the portion of monthly payments that is allocated to them. SolarCity and the investors also earn a separate return from the government grants, which act like a rebate toward the cost of installing the systems. The investors enter into the deals expecting a certain level of government grant, and therefore a certain return—in this case, their portion of a grant they expected to be worth 30% of the value of the installed system.
The key disagreement here is over how much SolarCity’s solar power systems are worth. Uncle Sam believes SolarCity inflated system values to receive more grant money. SolarCity is sticking to its guns and now going one step further by accusing the government of shortchanging it by $8 million.It’s he-said, she-said right now, and we’re not sure who’s word will be final. What we do know is that suing the government for more free grant money isn’t good publicity, especially in a time of rancorous debate over budget deficits and costly failures in green industries.Amazingly, federal bureaucrats don’t seem to be doing a very good job of “picking winners” in the solar industry. And the Europeans and the Chinese don’t seem to be doing much better… It’s almost as if the underlying tech isn’t ready for prime time.[Solar array image courtesy of Wikimedia]