Since 2008, and despite the hits the market has taken, US Bancorp (NYSE: USB) has invested $930 million in renewable energy projects, with $250 million of that in 2012 alone, and this year more is expected as the bank earmarks over a billion dollars in renewable projects over the next 4.5 years.
Bancorp is the US’ fifth largest commercial bank, and it renewable investment pathway indicates that it doesn’t share the skepticism of its industry counterparts over the future of solar, wind and other renewable projects.
Two weeks ago, Bancorp announced it would invest $100 million with SunPower Corp. (NASDAQ: SPWR) to install solar-power systems on the roofs of 3,000 US homes. Bancorp is the lead investor, with SunPower holding a “meaningful stake”.
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It is the “localized” nature of these projects that is attractive to Bancorp. The investment with California-based SunPower will see solar-panel installations installed in homes in California, Arizona, Hawaii, Massachusetts, New Jersey, New York, Pennsylvania and Vermont. And the company is seeking more investments along these lines with other institutions. So far, SunPower has pretty much secured $530 million in financing for these leased residential solar systems. It has developed some 13,000 leased systems and sold around 47,000 rooftop solar systems to residences who already own their own systems.
Sales are up, the leasing system seems to be working, and Bancorp sees the advantage here. And right now, Bancorp is a pretty hot stock. It’s up 1.60% and trading at about $34.19. Essentially, Bancorp is creating a niche for itself in the renewables market and this will separate it from its main competitors, like the Bank of America (BAC) and Wells Fargo. There are also other benefits here, including tax credits (30% credit on investments).
We also have to factor in the “Buffet effect”. US Bancorp is one of Buffet’s Berkshire Hathaway holdings, and Buffet’s hunger for renewables should give us some idea why Bancorp is heavy into solar and wind investments. While Wells Fargo (NYSE: WFC) is Berkshire Hathaway’s second largest holding, US Bancorp is among the group’s top three bank holdings, which together account for over 20% of the company’s investment portfolio.
By Charles Kennedy for Oilprice.com