Solar Securitization and Public Capital Finance

Update: SAPC Standard Contracts Now Available

The Solar Access to Public Capital (SAPC) working group has completed development of standard residential lease and commercial power purchase agreement (PPA) contracts available for use by developers, customers, and third-party finance providers in the solar industry. These documents are designed to improve consumer transparency, reduce transaction costs in the solar asset contracting process, and facilitate the pooling of the associated cash flows so that they may be securitized and sold in the capital markets.

Download the contracts here:

0% Down Residential Lease – Aggregated Business Model (for vertically integrated developers and installers)

0% Down Residential Lease – Disaggregated Business Model (for developers with a network of installation partners, or third-party finance providers that are discrete entities)

Commercial PPA

SAPC standardization efforts are ongoing. Please refer back to our website for the most recent versions of these and other contract types. Also coming soon: best practice guidelines for system installation and operations and maintenance (O&M).

If you have any questions on these contracts, please contact Paul Schwabe at paul.schwabe@nrel.gov. Thank you.

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NREL has launched a multi-year project, funded by the U.S. Department of Energy's (DOE) Balance of System Program, which aims to facilitate and hasten the solar photovoltaic (PV) industry's access to public capital through securitized instruments and other investment vehicles. The project comprises three distinct efforts, each targeting a market barrier to solar securitization: Solar Access to Public Capital (SAPC) working group, data collection, and analysis.

The Solar Access to Public Capital Working Group

SAPC is an assembly of over 200 leading organizations in the fields of solar deployment, finance, counsel, and analysis. The group's efforts are directed toward opening the capital markets to the solar asset class and building investor confidence in solar-backed investments. Activities include: the standardization of power purchase and lease contracts used by solar developers, installers, and integrators at the commercial and residential level; the development of standards for PV installation, operations and maintenance, evaluation criteria, and other aspects of project development and performance; the submittal of mock pools of solar assets to ratings agencies for unofficial ratings guidance; the collection of performance and credit data for use by ratings agencies, investors, and other stakeholders; and others.

Read the press release.

March 22nd, 2013 Webinar on SAPC and Solar Finance hosted by SolarTech

Audio recording
Webinar Slides

September 16, 2013 SAPC Update Presentation given at the Renewable Energy Finance Forum – West conference in San Francisco, CA

Presentation Slides

Additional SAPC Resources

Slides from a presentation made by Howard Altarescu of Orrick, Herrington, & Sutcliffe LLP and John Joshi of Capital Fusion Partners on securitization lessons learned from other industries.

Data Collection

To effectively assess the risks inherent to PV assets, and to ensure optimal credit ratings for solar securities, the market requires extensive amounts of data on system performance. To address this need, NREL has partnered with SunSpec—an industry-leading association of monitoring, component, and development entities—to build the O-SPaRC database which will draw performance information from thousands of systems across the United States. The database is designed to improve access to low-cost financial capital by providing credit rating agencies and investors a storehouse of information to conduct their analyses and get comfortable with the solar asset class.

Additionally, NREL is in dialogue with a number of parties to obtain additional performance data, as well as data on customer defaults to help assess the credit quality of the cash flows associated with PV assets.

Read the press release.

Analysis

Understanding the opportunities, barriers, and mechanics to financing solar PV with public capital is critical for all stakeholders—from developers, investors, counsel, and credit ratings agencies to policymakers, regulators, utilities, and the research community. To promote this understanding, NREL will produce analyses to assess the solar asset class and its potential in the public capital markets.

See the bibliography below for a list of NREL's current and upcoming resources on PV and public capital.

Other resources that provide background information on PV securitzation can be found in NREL's Securitization Library.

Technical Reports

Lowder, T.; Mendelsohn, M. (December 2013). The Potential of Securitization in Solar PV Finance. TP-6A20-60230. Golden, CO: National Renewable Energy Laboratory.

Feldman, D.; Settle, E. (November 2013). Master Limited Partnerships and Real Estate Investment Trusts: Opportunities and Potential Coplications for Renewable Energy. TP-6A20-60413. Golden, CO: National Renewable Energy Laboratory.

Feldman, D.; Mendelsohn, M.; Coughlin, J. (June 2012). The Technical Qualifications for Treating Photovoltaic Assets as Real Property by Real Estate Investment Trusts (REITs). TP-6A20-55396. Golden, CO: National Renewable Energy Laboratory.

Mendelsohn, M.; (October 2013). Renewable Energy Finance, Solar Securitization: A Status Report (Fact Sheet). NREL Report No. FS-6A20-60553.

Mendelsohn, M.; Feldman, D. (April 2013). Financing U.S. Renewable Energy Projects Through Public Capital Vehicles: Qualitative and Quantitative Benefits. 38 pp.; TP-6A20-58315. Golden, CO: National Renewable Energy Laboratory.

Schwabe, P.; Mendelsohn, M.; Mormann, F.; Arent, D. (June 2012). Mobilizing Public Markets to Finance Renewable Energy Projects: Insights from Expert Stakeholders. TP-6A20-55021. Golden, CO: National Renewable Energy Laboratory.

Market Insight Analyses

Mendelsohn, M. (November 2012). "How Do We Lower Solar Installation Costs and Open the Market to Securitized Portfolios: Standardize and Harmonize." Renewable Energy Project Finance.

Mendelsohn, M. (April 2012). "Will Solar Projects Need Tax Equity in the Future? Yes, but Baby Steps Toward Securitization Improve the Situation." Renewable Energy Project Finance.

Mendelsohn, M. (February 2012). "Tapping the Capital Markets: Are REITs Another Tool in Our Toolbox?"
Renewable Energy Project Finance.

Mendelsohn, M. (November 2011). "Securitization: A Dirty Word, or a New Opportunity for Renewable Energy?" Renewable Energy Project Finance.

To learn more about NREL's work in solar securitization and the application of public capital vehicles, please email us at SAPCinfo@nrel.gov.