Tesla leads solar securitiation market well past $1B in 2017 – seeking $131 million

Tesla is looking for partners to buy into more solar power projects. The company is reaching out to the market for $131 million.

Solar asset backed investments have broken through $1B this year – to just over $1.4B – for the first time, led by Tesla and Mosaic.

Tesla expects this new batch of financial products to raise another $131 million. The investment package will be broken up into two classes: A notes rated at A-, and B notes rated at BB. The weighted average FICO score of these underlying products is a respectable 745. Power purchase agreements make up 97% of the portfolio, while the remaining 3% were leases.

Prior to these transactions in 2017, Tesla had already raised $485 million in other asset backed transactions. The company’s prior two packages of solar projects were for $340 million in late October and $145 million earlier in the year (Greentechmedia suggests its closer to $185M). This most recent package would put them well over $600 million for the year on their own – more than the total amount of the sector in any prior years.

According to Bloomberg, this secularization by Tesla brings the total market of asset-backed securities to over $1.4 billion this year.

Mosaic closed on $307 million in solar deals in late October. In total, Mosaic has raised greater than $466M – that sum itself larger than any prior year of solar securitizations.

SolarCity offered the first batch of securitized solar power projects in 2013 with a $54 million offering.

As of June, Tesla’s solar unit Tesla Energy had installed 360,000 solar systems, with more than 3.1 gigawatts of installed capacity making them the world’s largest solar asset holder.

Electrek’s Take

Relative to the big Wall Street world of secularization, $1.4B is a tiny sum. I’m sure there are many transactions daily that are larger than the solar world is annually. However, it is continuing good news for the solar power industry to see sums of money like this able to flow. There are many private groups who wish to own investments of this nature, and the deeper the volume of investments is – the safer they are perceived to be. Safety in investments lowers the cost of the loans, which in turns lowers the cost of the solar power installations.

One thing to note – in Q3 2017, Tesla stated that they’d installed 109MW of solar power in the quarter and that 46% of it was sold versus leases being signed to a PPA. While its impossible to know what projects this $131 million is associated with, 46% of 109MW is 50MW, and 50MW at $2.75/W is about $137 million.

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