Monday, March 17, 2014

SunPower to Issue Asset Backed Bonds

In a bid to secure inexpensive capital, SunPower (SPWR) is pursuing alternative funding sources. According to a number of reports, SunPower, intends to issue bonds backed by solar assets later this year. Asset backed securities (ABS) pool together power purchase agreements from utility scale plants or residential solar leases, and pass on the payments from these assets to debt investors.

One of the chief reasons that solar companies are seeking capital is due decreases in the federal solar investment tax credit. The 30% tax credit for solar developers is set to decline to about 10% by the end of 2016.

The capital may be used to grow its residential solar leasing business. Gaining access to capital has not been easy, even for some of North America's largest solar companies. Despite price declines and technological improvements that have made solar more attractive there are still perception problems. This is due at least in part to the absence of long term data on solar power which can give the impression of uncertainty and risk.

The solar residential market is expected to grow. To illustrate the point. Best Buy and SolarCity announced a partnership that allows the big-box retailer to sell the solar energy firm’s services in about 60 stores and five states. SolarCity is known as the nation’s largest residential solar power provider.

© 2014, Richard Matthews. All rights reserved.

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