With solar a new growth sector in asset-backeds, it’s only natural that the securitization-minded might start looking into electricity storage, which is primed to feed off the rise of renewable energy.
“There are cash-flow streams” with battery-based storage, said Mary Rottman, the president of the Solar Energy Finance Association, on the sidelines of IMN’s ABS East conference. And those streams can form the backbone of a securitization.
So far this year, there have been a little under $600 million in bonds backed by solar-related assets, mostly leases and power purchase agreements.
Developers SolarCity and Sunrun have dominated issuance.
Owning a battery typically means operation and maintenance (O&M) agreements and those might provide a reliable cash stream amenable to an asset-backed, Rottman said.
Rottman said a loan to finance the battery — perhaps an energy efficiency loan — could also be potentially securitized.
“Solar companies realize that there’s these value streams,” she added. “They’re looking at technology…that optimizes your solar system.”
Regulations are already boosting the storage sector, as the swift expansion of solar is fueling the need to store power.
A 2013 mandate in Califorina is requiring the state’s three large utilities to procure 1.3 gigawatts of energy storage by 2022. At least half of this must be owned by third parties, according to greentechmedia.com.
One of these utilities, San Diego Gas & Electric, said in July that it was launching a new approach to storage. Through a special tariff it would encourage its customers to install behind-the-meter batteries that would then be hooked up to the grid for the utility to tap at certain times.