Digital Federal Credit Union has teamed up withSunPower Corp. in an agreement that could provide up to $100million in loans for residential solar projects in the U.S.

The deal calls for the $5 billion DCU in Marlborough, Mass., toserve as the lead originator of loan participations for 36 credit union partners formed tosupport SunPower's residential loan program. Eligible homeownerswho join the credit union can receive a loan of up to $50,000 for ahigh-efficiency solar power system. Available for terms up to 20years, DCU said borrowers may also be eligible for a 30% federaltax credit for the installation of solar power systems.

The idea of partnering with the San Jose, Calif.-based SunPowersprang from a 2012 meeting with credit unions that are members of aCallahan & Associates' industry group, said Craig Roy, seniorvice president of retail lending at DCU.

A credit union executive at that meeting talked about solarlending and how it had benefited members. The executive also saidsolar loan borrowers tended to be high quality, with stellar creditscores.

Some internal issues at the credit union prevented the programgoing forward, Roy said. Others in the Callahan group wereintrigued by what they heard and expressed interest in exploringthe idea of a loan participation consortium.

“We spent the better part of a year looking at thepossibilities,” Roy recalled. “We wanted to know if this issomething good for the members. Certainly, there's theenvironmental or green component to this.”

More research was conducted to determine just how competitivesolar lending is in the marketplace, Roy said. The group ofinterested credit unions discovered most financing options offeredhigher rates, restrictive terms and leasing arrangements.

Roughly five months before DCU and SunPower announced the dealin late September, the group started putting the program together,which included a thorough due diligence vetting of SunPower, Roy said. There was even atour of the company's headquarters to watch how the solar panelswere constructed.

“We wanted to make sure we were aligning ourselveswith the right partner,” Roy said. “We asked a lot of questionsabout SunPower versus other competitors. We wanted to know aboutthe longevity of solar panels because if we're making loans up to20 years, we wanted to make sure the panels would still produceafter 20 years.”

SunPower launched in 1985 and has offices in North America,Europe, Australia, Africa and Asia. The company said it is thelargest installer of U.S. residential and commercial solar panelswith more than 100,000 residential systems installed.

Next Page: Power of Participation

The partnership with DCU will enhance the SunPower Loan offeringby allowing more homeowners to get the most efficient and reliablesolar technology available, said SunPower Chief Financial OfficerChuck Boynton, in a statement.

“Once the loan is paid off, the homeowner gets free electricityfor the life of the system. If they end up selling their home, theymay benefit from increased home value as a result of the solarsystem on the roof,” Boynton said.

The SunPower loan is available in all 50 states and the Districtof Columbia, according to the company. SunPower system owners alsohave a 25-year power and product warranty. In addition to the 30%federal tax credit now available for installing solar powersystems, SunPower said there may also be additional incentivesoffered by states and municipalities.

Roy said five to 10 credit unions have committed to the SunPowerloan participation program and others are still consideringinvolvement.

“We've made a $100 million commitment around this program. Thereare estimates that these loans are bringing in $8 million a monthfor solar financing,” Roy said. “And, when you look at the borrowerprofiles, they are homeowners and they have high quality credit.These are unsecured loans so you need to make sure you have qualitypeople who have demonstrated a strong credit history.”

The next steps for the SunPower loan participation partnershipwill include dealer training, Roy said. Web applications will becreated for dealers to direct customers to for more information andhow to become members of the credit unions involved. At press time,the online effort was scheduled to roll out some time inOctober.

“DCU's participation in program is also based on the cooperativeprinciples that are at the foundation of credit unions, and ourapproach to the development of innovative programs that serve theneeds of businesses, consumers and our members,” Roy said.

Jon Jeffreys, vice president of Callahan & Associates, whichassisted in negotiating the deal with SunPower, shared Roy'ssentiment.

“Credit unions are working cooperatively to bring value and costsavings to homeowners throughout the country who may significantlylower their utility bill and add value to their home,” Jeffreyssaid.

http://www.cutimes.com/2013/09/30/credit-unions-prep-as-shutdown-looms