Tesla Leads Surge in U.S. Asset-Backed Securities www.bloombergtv.mn
Led by Tesla Inc., the U.S. solar asset-backed securities market has had a banner year, more than quadrupling from 2016.
Tesla deals account for $485 million of the more than $1.3 billion raised so far this year, according to Bloomberg New Energy Finance. Solar Mosaic Inc., an industry financier, has raised $466 million, followed by rooftop solar company Sunnova Energy Corp. with $255 million. The total last year was $321 million.
The uptick shows that the residential solar industry has become large enough for installers to monetize long-term consumer contracts by refinancing them in the capital markets.
The appeal of securitization is straightforward: it allows residential-solar companies to realize the value of their long-term consumer contracts by refinancing them in the capital markets. Accessing cash is especially important now, with installations contracting and mounting investor focus on profitability.
“The ABS market finally popped this year,” Nathan Serota, a New York-based analyst at Bloomberg New Energy Finance, said in an email Wednesday. “Newer entrants to the solar-finance space achieved sufficient scale to access the capital markets while established national solar firms are on the lookout for cash wherever it can be found -- and securitization is one way to bring money in the door,”
That Tesla leads the pack isn’t a surprise. Its energy unit, formerly known as SolarCity, has led every year since the solar-ABS market debuted in 2013, and it remains the biggest U.S. rooftop-solar company despite shedding market-share this year. What’s different now is that this is the first year that there have been more than two issuers, and the amount issued by Mosaic and Sunnova each has exceeded SolarCity’s previous annual high. Dividend Solar Inc. has rounded out the offerings this year with $129 million.
Still, the slowing market will probably mean lower ABS volume next year.
“Solar ABS issuance is a trailing indicator of residential installations,” Serota said. “Fewer systems installed, fewer contracts to securitize.”
Published Date:2017-11-23