Tesla-owned SolarCity agrees to $30m settlement over solar grant allegations

The solar company acquired by Tesla in 2016 has agreed to pay almost $30m to resolve allegations that it violated a claims act to generate more money through a US-based solar deployment programme.

SolarCity – which was purchased by Tesla Motors in November 2016, after the alleged breach of conduct – has agreed to pay $29.5m to resolve the Justice Department’s allegation that the company made thousands of claims overstating the costs of its installations to receive better grant payments.

Although not an admission of guilt, the settlement sees SolarCity agree to drop charges it had against the US government in relation to the investigation.

“SolarCity took its responsibilities under the programme very seriously, and far from trying to overstate the value of those projects, it went to great lengths to determine accurate values,” A SolarCity representative said in a statement. “Independent appraisers, accountants, and investors gave those projects a total value of approximately $1.8bn.”

The investigation revolved around Section 1603 – a programme set up under the Obama administration that allowed solar companies to receive federal grants equal to 30% of the cost of a solar installation. The Justice Department alleged that SolarCity, and numerous other solar firms, made thousands of overstated claims through the programme since 2009.

The settlement was the result of a joint investigation conducted by the Treasury, the Treasury OIG, and the Civil Division’s Commercial Litigation Branch.

“The Section 1603 Programme subsidised the renewable energy industry through cash grants to cover legitimate costs of renewable energy properties,” the Justice Department’s Civil Division’s acting assistant attorney general Chad Readler said.

“This programme expired, but this settlement demonstrates that the government will still hold accountable those who sought to take improper advantage of government programs at the expense of American taxpayers.”

The settlement arrives as the US Solar Energy Industries Association (SEIA) warns that the cost of solar could double if President Trump approves new proposals that place costly import tariffs on Chinese solar technology.

The US International Trade Commission (ITC) agreed to a ruling last week that Chinese imports – often much cheaper than US-based technology – had harmed US manufacturing. The ITC will now meet with US manufacturers to discuss views and solutions before an expected decision is announced by the President before the January deadline.

Tesla’s timeline

Tesla submitted a bid to purchase SolarCity in June 2016 – as part of a move to “complete the picture” and establish a holistic and “vertically integrated” clean energy empire. The deal was eventually settled and agreed later that year.

Since the acquisition, Tesla has unveiled a new four-step “master plan” that has seen the company branch out from the development of electric vehicles (EV), to capture new revenue streams for integrate solar systems and energy storage applications.

The master plan includes roadmaps to scale up EV and battery production at Gigafactories, while the expertise of SolarCity facilitated the rollout of Tesla’s new solar roof tiles.

Matt Mace

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