The New York Times reported that California utility Pacific Gas & Electric and solar company SunRun have formed an alliance that will eliminate the upfront cost of installing rooftop solar panels for some home owners.

PG&E subsidiary Pacific Energy Capital is investing $100 million to help pay for the installation of more than 3,500 home photovoltaic arrays.

SunRun will use the money to install panels throughout 2010 and 2011 in at least five states, including Arizona, California, Colorado, Massachusetts and New Jersey. The PG&E subsidiary will get any government tax credits associated with the home projects.

“We’re at the proverbial ground zero of these new technologies and so perhaps more than any utility holding company in the country we have a strategic imperative to get ahead of the curve through having a propriety seat at the table with a partner like SunRun,” says Brian Steel, P.G.&E.’s senior director of corporate strategy.

Homeowners do not pay for solar arrays – which can cost more than $30,000 — but sign a power purchase agreement with SunRun that fixes the cost of their monthly electricity payments for as many as 18 years. In exchange, SunRun installs, owns and maintains the solar systems.

The solar financing model of offering a power purchase agreement, or leasing solar panels, is one of the most promising methods for making solar photovoltaic panels accessible to more homeowners. The financing companies own and maintain the panels over 20 years and so they benefit from the state and federal tax credits and rebates and sell the electricity to the utility.