Google and rooftop solar power company SolarCity announced a $280 million investment deal Tuesday, the largest such deal for home-based solar power systems in the United States.

The investment will give San Mateo, Calif-based SolarCity the funding to build and lease solar power systems to a 7,000 to 9,000 homeowners in the 10 states where it operates.

As SolarCity's financing partner, Google plans to recoup its investment over time through those lease payments.



Funding arrangements like this are not uncommon in the energy businesses, but they have previously been restricted mostly to utilities and a handful of banks with specialized industry knowledge.

Google's entry into this type of financing is both a sign that more companies may be interested in funding alternative energy ventures and a nod to the fast-growing market in leasing residential solar panels.

"Google is out in front on this," said Nathaniel Bullard, an analyst at Bloomberg New Energy Finance. "It's a sign of confidence in the space."

Google likes to experiment with clean energy investments -- witness last year's wind farm investment -- but the SolarCity deal marks its first move into the residential market. SolarCity is one of a handful of companies that lease solar panels to homeowners.

The idea behind leasing is to keep things as simple and cheap for the customer as possible.

In SolarCity's case, the customer signs a multi-year agreement with the company and begins writing a monthly check to the firm that's ideally 10% to 20% percent lower than what they were previously paying for their monthly power bill.

SolarCity then handles the rest -- everything from purchasing and installing the panels to claiming the various tax credits offered by the federal, state, and sometimes even local governments.

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