Green bonds for rooftop solar?

What if the Industrial Authority used its bond-issuing power to finance rooftop solar? And what if it combined that with utility-scale solar projects on its own industrial park lands, and for example at the airport, or at the new Withlacoochee Wastewater Treatment Plant?

Here’s the idea, in a report by Citi GPS, Energy Darwinism: The Evolution of the Energy Industry, October 2013, pages 48-49,

It is not just the technology that is evolving in the solar industry; the financing of solar projects, both residential and utility-scale is evolving quickly. The most notable development here has been in the form of solar leasing, whereby the rooftop panels are owned by a third party who effectively leases the rooftop from the home/factory/office owner, the latter receiving payment normally through a reduction in electricity bills paid for by the lessee. This provides the benefits of cheaper and cleaner solar electricity to the homeowner, whilst negating the need for the significant initial capital outlay. The panel owner or lessee earns their return via incentive mechanisms such as the U.S. Investment Tax Credit, and via the sale of the electricity back to the local utility. This financing mechanism has proved particularly successful in the U.S. and is gaining traction in the UK, with companies in other countries looking to follow suit.

This is what Southern Company CEO Tom Fanning suggested back in May that SO might do. But we don’t have to wait on Southern Company or Georgia Power.

At the utility scale level, the emergence of innovative financing vehicles such as green bonds is also facilitating deployment of the technology. The predictable and low-risk nature of solar generation means that it is ideally suited to debt finance. Green bonds are essentially a pooled investment which is then invested in the debt of many different projects, potentially in different countries or jurisdictions, thereby reducing technology, political, regulatory and other risks via the portfolio effect. The long-dated nature of solar farms with their (relatively, depending on location) predictable revenue streams, low risk (no moving parts, maintenance) and attractive returns relative to bond yields make them especially attractive to certain types of investor such as pension funds or insurance companies, as well as companies looking to boost their green credentials while earning an attractive return on capital.

And why not combine the two ideas? Green bonds for rooftop solar!

Jobs and industry right here in south Georgia; isn’t that what the Industrial Authority is for?


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