Recently, the U.S. solar industry has been pleading for access to previously untapped investment structures — including the master limited partnership and the real estate investment trust. While both options remain on the table, there’s now an additional proposal that could help pave the way for funding of substantial solar projects.
The Golden, Colorado-based U.S. National Renewable Energy Laboratory (NREL) recently convened the Solar Access to Public Capital (SAPC) working group, with a mission to enable the securitization of solar photovoltaic assets and associated cash flows in the marketplace.
SAPC’s primary efforts center on the standardization of power purchase agreements, leases, and other documents relevant to residential and commercial deployment, and the development of robust datasets to assess performance and credit-default risk.
These activities are designed to allow projects to be grouped into tradable securities.
Securitization is expected to attract additional investors to the solar asset class, enabling the industry to tap a larger and more liquid pool of capital than is currently available. The working group includes over 60 members representing some of the leading organizations in the fields of solar deployment, finance, counsel and analysis.
“It’s exciting to see the industry come together to build the foundation to a securitized market,” said NREL Senior Financial Analyst Michael Mendelsohn. “Access to low-cost public capital offers the potential to significantly lower the cost of solar energy.”
SAPC will also provide a forum for some of the leading voices in the industry to discuss the range of barriers, risks, opportunities and best practices in the creation of a solar securities market. Public capital vehicles can take various forms, including asset-backed securities, master-limited partnerships, real estate investment trusts, or various debt products.
The NREL-led effort is funded under the Department of Energy’s Sunshot Initiative.
Among the 60 current participants are: Altus Power Management, Bank of America Merrill Lynch, Borrego Solar, Capital Fusion Partners, Chadbourne & Parke LLP, CleanPath Ventures, Clean Power Finance, Crédit Agricole Corporate and Investment Bank, EcoPower Capital, Enfinity. Kroll Bond Ratings, kWh Analytics, Locus Energy, OneRoof Energy, Orrick, Herrington, & Sutcliffe LLP, Rabobank, Recurrent Energy, Rocky Mountain Institute,SCS Renewables, Sidley Austin LLP, SolarCity, Solar Electric Power Association, SolarTech, Standard and Poor’s, Sungevity (News - Alert), SunPower, SunSpec, and Sunrun.
Questions about SAPC can be forwarded to SAPCinfo@nrel.gov.
Edited by Braden Becker