Smart. So smart.

This is a brilliant solution to Google’s basic problem: it has tons of cash, can’t earn a decent rate of return either through interest or investing in search, and wants to shield its search income from taxes.

Jessica Guynn, LAT:

Google wants homeowners to use solar panels to generate electricity. And it’s investing $75 million to help up to 3,000 of them install panels on their roofs.

The Internet search giant said Tuesday that it will create a fund for solar installers to offer financing plans.

One of the biggest hurdles to installing solar panels are the upfront costs. Homeowners often don’t have the upfront cash and solar installers don’t have the means to offer financing.

Google said its plan will allow homeowners to install a $30,000 solar electricity system with little or no money upfront. Instead homeowners would pay a monthly fee which would be about the same that they would pay in their monthly bills to their local utility.

So, see how it works? Google’s customers pay it, let’s say, 10% on the investment, the federal government gives Google a one-time tax credit that lowers their marginal taxes paid by (this is just a guess) an equivalent of 1% annually, and they’re getting 11% return on investment. Their return on assets presently is 14.7% while their $4.7B in cash is returning approximately zero, so putting spare cash to work will boost that. Maybe best of all, everyone thinks they’re being Santa Claus.

To make it perfect, all they have to do is figure out how to sell the business should the demand for cash ever re-surface. And I’ll bet they’ve already done that.