Alright guys, I think we should
tackle a subject that can be confusing, but definitely has huge implications
for the U.S. solar industry. We are
talking about the securitizing of solar.
I surfed the solar world the past couple days and found a lot of talk
about the securitizing of solar PV assets.
“Huh? What the heck does that
mean”, you may be asking yourself. First, the basics. To securitize something means to create an
investment instrument, an investment product, that can be bought and sold. This investment instrument is used to raise
funds for a particular purpose and those funds can be raised from the public.
To securitize solar would mean to
make solar projects an investment open to the public in ways that are not
happening now. The solar securitization
effort is being led by the Department of Energy’s (DOE) National Renewable
Energy Laboratory (NREL). They have
created the Solar Access to Public Capital (SAPC) working group to explore the
issue. Is that enough acronyms in one
paragraph for ya??
Alright, I gotta get technical on
you for a hot second, so bear with me. The
SAPC’s main focus is on the securitization of Power Purchase Agreements (PPA),
solar leases and other contracts relevant to the deploying of commercial and
residential solar systems. In order to
do this, the solar industry would have to have a standardized PPA contracts and
lease contracts, and develop comprehensive, standardized data sheets so
investors can assess the solar system performance as well as credit default
risks for PPA host. Just like the stock
market has standardized information filing systems for public companies so
investors can review to make an investment decision, solar securitization would
require something similar.
So, what is the point of all
this? Easy answer: access to more money, or if you want fancy wording, access
to more capital. By securitizing solar,
individual investors or groups or companies can all get involved with solar and
be able to invest in projects. So, if
solar was securitized, you could seek out opportunities to invest in large
PPA’s or other projects easier than you could now. It has the potential democratize, to
revolutionize, the solar industry. We
are talking about opening the solar doors to hundreds of millions, billions of
dollars of investment potential.
Solar investment opportunities
for all, so to speak.
Alright everyone, I hope I helped
shine a little sunlight on this topic for you.
When we have more solar securitization developments, I will make sure to
let you know.
Alas, I must leave you now, I
gotta get back to solar surfing for the next blog!
Stay Solar,
