Secondary Market in Solar: Securitization

Abstract

This Project examines the nascent field of financial securitization in solar. Securitization aggregates a similar type of assets (i.e. mortgages or credit card debt) in order to sell the future cashflows to investors based on a set contract regarding principle and interest, thus making the performance of an illiquid asset similar to that of bonds. Securitization allows greater levels of public capital to invest in these products and lowers the cost of capital that asset class must pay. Solar has grown greatly in the last five years as an asset class and thus securitization has begun to develop. The paper will look at the recent development in securitization type investment vehicles for solar. This includes Solar City’s Asset Backed Securitizations and six yieldcos now publically traded. The paper will then explore ways securitization can continue to grow and how it can benefit the solar industry. Key developments in Standardization for contracts and for investors will help securitization grow.