Most discussion of solar energy in the U.S. is focused on the large, centralized photovoltaic installations that are going up in the sunny parts of the country. But there is another rapidly growing area in site-based residential or commercial solar installations. Traditionally these small installations have been hard to finance, but there are some powerful new mechanisms that may accelerate growth.
One new approach follows the mortgage origination process where bundles of small financings are gathered and then pooled into securitizations. Standard & Poor’s Director of Utilities, Trevor D’Olier-Lees, projects that the cost of residential installations on a million homes would be about $16 billion. 45 million suitable homes could use $750 billion to equip them with solar power. D’Olier-Lees says that banks are not the best providers of these long-term financing assets, but the loans would make ideal securitization vehicles. Some companies are starting to work on these structures. From Green Tech Media:
No rooftop solar-asset backed securities have yet been issued. But ‘multiple residential and commercial solar developers such as Sunrun, SunPower and SolarCity are likely working on issuing asset-backed securities over the next three to nine months,’ Credit Suisse reported in its February 25 Solar Snippet. Other third-party leasing companies like Clean Power Finance and Vivint, the report added, are also showing strong enough growth to participate.
‘We believe that solar securitization for residential solar projects will happen in 2013,’ Credit Suisse predicted. Early investors will be insurance companies looking for secure long-term investments.
Another important approach to funding site-specific solar installations is “on-bill repayment” (OBR), where repayment for the solar hardware and installation is bundled on the user’s utility bill. From the Clean Energy Finance Center: