Our firm specializes in Solar Energy projects, especially in Africa, with our partner firm http://www.solarcontinent.com.

Methods of Financing Solar Projects

Manufacture Financing and Engineering Financing: Our team of manufacturers and engineers for a portion of the project will finance the manufactured goods partially or in whole, as well as some of the engineering work to complete the solar projects.

Solar Securitization Funding: Existing solar project output and future output and production of energy are collectively packaged into a “securitization fund” of which units of the combined production of all the solar projects from buildings to farms is combined within a Country to raise additional capital for solar projects. Solar financing through securitization has become the darling investment for major corporations that want to put solar panels on all of their roof tops and then leverage the energy production for capital now. Basically, this allows major corporations to invest into solar energy and then borrow against their solar energy units up to 10 years of their projected gross profits!

For business, solar securitization offers a pathway to reap additional financial rewards from existing or planned projects. For the 50% of residential systems financed by third parties, securitization could provide those projects with access to funds to install more systems.  within the US nationally, the potential market is huge. According to NREL:

• An estimated $1.34 billion of potentially securitizable solar assets were installed in 2012.
• A $100 million securitization fund could fund the development of 100 MW of small commercial systems, or 133 MW of large commercial and industrial (C&I) systems.

Changes in solar financing are intensifying the need for such a framework. On the positive side, in 2013 solar accounted for 29% of all new electricity generation capacity. This made solar the second largest source of new electricity generating capacity behind natural gas, according to the Solar Energy Industries Association (SEIA). Furthermore, those installations are increasingly being done by utilities which could arguably use increased cash for improvements, additional projects and maintenance. Commercial installations are also taking interest in solar energy. Wal-Mart alone has installed almost 90 Megawatts. To put this in perspective, Wal-Mart’s 90 Megawatts could power over 13,000 homes in California, or 6,000 in Tennessee, due to difference in average home efficiency in the two states.

For distributed Solar Energy Projects in Africa, the combination of a grouping of small projects to be “securitized” opens a potential growth strategy for the African Solar Energy Market.

Benefits of Securitization:

  • Pooled assets diversify credit, geographic and other risks, and spreads the costs of asset assessment, performance management, and reporting.
  • Credit risk and rating are improved — and thus cost of capital.
  • Investors have access to businesses and industries to that might otherwise be out of reach,
  • Asset originators can get more favorable financing terms than they may otherwise be able to obtain from traditional sources.
  • Assets are removed from their originator’s balance sheet, and thus insulated from the parent’s corporate risk.

The limited availability of low-cost financing is holding back market adoption of solar photovoltaics (PV). However, securitization can make project financing more affordable than it is today, according to new research from the Open Sustainability Technology Laboratory at Michigan Technological University.
Securitization of residential solar PV power purchase agreements (PPAs) can reduce the cost of capital for solar PV projects by between five and 13 percent, said the researchers, Theresa Alafita and Joshua Pearce.

The yield on SolarCity’s BBB+ rated 2013-1 notes was 4.80 percent.

Energy Bonds, Green Bonds, Solar Bonds

In the current economic climate development financing has dried up, with many projects stalled as banks are unable to offload mature project investments to recycle funds for developments. Solar energy projects lend themselves to securitisation due to their stable income profile. Banks or other institutions could finance projects in their first few years of operation, then, after at least one year’s operation, securitize them as proven and mature investments for institutional investors. In this model a fund (bond holding vehicle) would purchase portfolios of debt secured against solar energy projects from banks. The fund would finance this purchase by selling bonds into the market. The bonds could be in the form of c. 15 year amortising bonds which are suitable for annuities. Critical mass is important. The fund must be of sufficient size that its bonds are liquid in the market and can be subsequently traded by bond investors. Going back to the first forms of securitisation, only quality senior loans would be purchased by the fund, and only a single type of bond would be sold by the fund to investors. The parameters should be transparent, predefined and regulated. This should produce a standardised quality bond for the bond-holders. The bonds produced will have similarities to energy utility bonds but could be classified as Green Bonds as they would not be associated with funding any thermal power (coal, oil or gas).An advantage over energy utility bonds is that retail or institutional investment allocations can be made into the debt of pure renewable energy assets. The bonds could pay a coupon similar to that of the bonds of energy utilities 5% to 6%. This type of fund is designed to transfer to long-term investors the lowest risk part of the capital structure of renewable energy assets that have a track record. It will enable banks to recycle their capital and lend new riskier development finance to facilitate the building of new renewable energy assets, and so facilitate the long term funding requirements of renewable energy asset owners. This principle could be applied to the idea of a green investment bank where the bank purchases debt and repackages it to produce bonds.

Listing in the Public Markets and Private Equity

With the advent of securitization for solar energy projects, there is a renewed faith in the potential to leverage current assets and solar energy projects to create cash flow of which many pension funds, investors, and business owners are very pleased to see come back to the market after the slow down in 2008 and 2009. Currently, the NYSE Euronext is the recommended venue for our colleagues to list and raise capital for the Solar Energy and Renewable Energy projects or directly through a primary listing on the Frankfurt Stock Exchange Deutsche Bourse. Our listing team at http://www.stockexchangelistings.com  Can also be reached at info@stockexchangelistings.com. Through NYSE and Frankfurt listings, companies can raise in access of $5 million to $500 million for developing projects, especially if there are existing assets. However, the NYSE Euronext will allow for new firms to list on the exchange, and prior audits are not required.

In addition to Public Markets, our vast network of over 4,000 institutional investors in Solar Energy often will look at well developed projects for private placement and debt equity.

Crowdfunding of Solar Energy Projects

Our proprietary software system is capable of setting up Solar Energy Crowdfunding communities and crowdfunding solutions for solar energy projects. Please look at www.ifundx.com for more information on the software or email info@ifundx.com to discuss building your own Crowd Funding Community for solar energy projects.

If you are looking at launching a Solar Energy Project and need assistance with the engineering, planning, measuring, or building of your project, we highly recommend discussing this with www.solarcontinent.com or info@solarcontinent.com as they have an extensive group with over 1 GW of installations globally in Solar, Wind, Hydro, and Waste to Energy.