Bonds backed by solar power, now that's a good idea from Wall Street!

Solar Panels Roof Installation
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Green $$$

Bonds can be backed by all kinds of assets, from conventional stuff like mortgages, credit card loans, car loans, physical assets (machinery, buildings, land, etc), to more unconventional things... like energy from the sun. The New York Times reports:

Standard & Poor’s has given its preliminary blessing to the first offering of this kind, rating a set of notes intended to raise $54.4 million for the fast-growing installation company SolarCity. On Monday, it gave a rating of BBB+, a low investment-grade designation, to the notes. SolarCity plans to sell the bonds, which are secured by a bundle of residential and commercial power contracts, privately this month.

Don't forget that residential solar is mostly a middle-class phenomenon, so there's quite a wide potential base for this.

These solar bonds can help finance the further expansion of solar installers and developers. This works because the future returns of large numbers of solar systems are fairly predictable (you have known fixed costs, no fuel costs, and you can enter long-term electricity pricing contracts). By offloading these bonds to investors, this frees up money that can then be reinvested in more solar systems, a true virtuous cycle!

Bond holders get interest payments from solar power, and solar installers grow faster than if all their capital was tied up in existing systems. What's not to like?

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Via NYT

See also: Walmart has more solar capacity than 38 U.S. states

Tags: Energy | Finances | Solar Energy | Solar Power

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