Billions of Dollars of New Potential Financing with Solar Securitization

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In a major breakthrough for the solar industry, SolarCity announces it intends to offer solar securitization. Securitization will open up financing options for residential, commercial, and utility-scale solar projects, resulting in billions of dollars of new potential financing for the solar industry.

Every now and then, there’s a major breakthrough in the solar industry that is remembered for years to come. One of these may have just happened: SolarCity (Nasdaq: SCTY) announced that it intends to offer solar securitization. This first offer comes in the form of a $54,425,000 aggregate principal amount of Solar Asset Backed Notes that will mature in December 2026. The notes will be secured by a pool of PV systems, related leases, power purchase agreements, and additional rights and agreements. SolarCity’s offering will represent the first securitized portfolio of distributed PV.

Distributed solar securitization will be an important step for installers such as SolarCity, SunPower, and First Solar. Securitization will help lower borrowing costs and provide a funding source for residential, commercial, and utility-scale solar projects, resulting in billions of dollars of new potential financing for the solar industry.

SolarCity’s $54 million offering isn’t huge, but it’s the solar industry’s first step toward securitization going mainstream. Over the next year, other players are expected to follow SolarCity, especially as investors become more familiar with the terms of securitization.

According to GTM Research, Rob Day of Boston-based Black Coral Capital commented: “This will be a good opportunity to see institutional investors validate the distributed solar asset class. Securitization is a win-win-win for homeowners, solar developers and investors: lower financing costs result in more affordable solar for homeowners; deeper capital pools enable developers to scale faster; and stable, long-term solar assets create attractive returns for investors. SolarCity is the first mover here, but I expect they’ll be soon followed by other financing platforms like Clean Power Finance, OneRoof, Sunrun and the rest. Accessing low-cost capital will be a key competitive factor for this industry as it consolidates over time.”