The U.S. Department of Energy's (DOE)’s National Renewable Energy Laboratory (NREL) has formed a working group with the goal of securitizing solar photovoltaic assets and associated cash flows.
Securitization is expected to attract additional investors to the solar asset class, enabling the industry to tap a larger and more liquid pool of capital than currently available.
The working group, Solar Access to Public Capital (SAPC) will focus on the standardization of power purchase agreements, leases, and other documents relevant to residential and commercial deployment, and the development of robust datasets to assess performance and credit-default risk, according to a press release. More uniformity to these activities allows projects to be grouped into tradable securities.
SAPC will also provide a forum for some of the leading voices in the industry to discuss the range of barriers, risks, opportunities, and best practices in the creation of a solar securities market. Public capital vehicles can take various forms including asset-backed securities, master-limited partnerships, real estate investment trusts, or various debt products.
The working group includes over 60 members representing some of the leading organizations in the fields of solar deployment, finance, counsel, and analysis.
“It’s exciting to see the industry come together to build the foundation to a securitized market,” says NREL senior financial analyst Michael Mendelsohn. “Access to low-cost public capital offers the potential to significantly lower the cost of solar energy.”