First Solar Bonds Financing $4.6 Billion U.S. Panel Boom

Bloomberg. By Andrew Herndon. Underwriters from Bank of America Corp. (BAC) to Credit Suisse AG and Citigroup Inc. (C) for the first time are close to converting sunlight into cash in order to pay bond investors. Similar to asset-backed securities (that finance everything from car purchases to college tuition), solar bonds are a kind of municipal revenue bond which finance the development of solar projects such as a solar power systems installation. These bonds are often low-interest and open to all who wish to invest in them, meaning there is a potential to attract returns with little to no fees. The bonds will help fund several rooftop power projects. Bloomberg New Energy Finance estimates that the bonds will need to raise about $4.6 billion next year to finance these projects.

U.S. solar installations, including rooftop and utility- scale projects for residential installations or commercial installations, may jump at least 75 percent to exceed 3,200 megawatts this year. That amount of energy is estimated to be enough to supply about 700,000 California homes, according to the Solar Energy Industries Association trade group. If the solar energy installations exceed the expected percentage growth then the number of megawatts supplied will increase as well.

Funding solar development is not as easy as it was last year. Developers are seeking new sources of funding after a U.S. tax incentive for solar energy installations expired last year. This means that they may have to pay higher interest rates than more established asset-backed bonds to attract a wide range of investors.