Monday, December 8, 2014

First US public offering of solar bonds: can crowdfunding take clean energy to the next level?

First US public offering of solar bonds: can crowdfunding take clean energy to the next level?
The largest solar installer in the US announced Wednesday that it is offering up to $200m in bonds to retail investors, marking the first registered public sale of solar bonds in the country. SolarCity’s landmark move toward crowdfunding could democratize the way solar projects are bankrolled *and grow overall investment for clean energy.

Large institutional investors (such as Google, Honda and US Bank, in the case of SolarCity projects) finance the bulk of solar projects today. While individual investors can already put money into solar projects via crowdfunding platforms such as Mosaic, SunFunder and, most of these opportunities are only available to accredited investors – wealthy individuals – or are limited to just one or a few states, said Tim Newell, SolarCity’s vice president of financial products.

“This is the first time you’re seeing investment offered broadly to American investors through a public offering,” Newell said on a press conference call Tuesday. “In other cases, companies are allowing investors to invest in a single solar project or perhaps a small group of homes or projects.”

It’s an important shift given that investments in clean energy have been falling, even as the global solar and wind markets see double-digit growth. Investment flows have dropped about 20% in the past two years as solar and wind prices have fallen, Michael Liebreich, head of Bloomberg New Energy Finance, said during aClimate Week event in New York last month.

But investors are looking for the types of steady returns that clean energy projects can provide, said Steve Cornell, senior vice president of policy and strategy at NRG, at the same event. “It’s no news to anybody that CDs are paying next to nothing and cash is paying less,” he said. “I think there’s a huge global appetite for yield-like investments that can create steady capital growth.”

The SolarCity bonds, which are available to US nationals in all 50 states who are at least 18 years old and have a US bank account, will represent a portfolio of thousands of projects across the country. Through its new direct investment website, SolarCity is offering a range of bonds – starting at $1,000 – that mature in one to seven years and pay up to 4% interest out of income from SolarCity’s projects.

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