Today in Cleantech

Bloomberg reported last week that underwriters from Bank of America to Credit Suisse are looking at securitizing solar power installations. In practice what this means is that the contracts that solar installers sign with customers will be bundled and resold as solar backed securities (I know, hard not to harken back to mortgage backed securities). The buyers of the debt products will then get the rights to the monthly payments from solar customers who are making lease payments on their solar systems or who are making energy payments at standard power rates. Unlike mortgage backed securities I think these should be lower risk, because while you can walk away from you home, whoever’s living in that home is going to have to get electricity and is thus going to want to fulfill their contract in order to do so. Bloomberg New Energy Finance estimates that U.S. residential will require $1.3 billion in financing this year and commercial rooftop another $2.3 billion, and if a market opens to easily finance solar, then dealing with the hefty up front capital costs of installation could be one barrier that solar backed securities can solve.