SolarCity (Nasdaq: SCTY) has acquired a company that will make it possible for everyone to invest in its solar portfolio, while adding another way to keep new money flowing in.
While banks now lend to big solar projects, they still aren’t much interested in the small ones – which are the vast majority.
Common Assets’ investment platform will be the basis for an online lending marketplace where individuals and organizations of all sizes can buy debt-based instruments (like a bond) backed by SolarCity’s enormous portfolio of rooftop solar. Until now, these investments have only been available to large financial institutions.
"People want to support clean energy development. Customers are seeing the benefits of getting solar for their homes but they would like to participate in other ways as well," notes Lyndon Rive, CEO of SolarCity.
SolarCity now installs nearly a third of all residential solar systems in the US, according to GTM Research. Over the past year, its stock has surged from $8 a share to $75 – it has a mind-boggling 80,000 customers and expects that to grow to a million within the next four years!
Unlike crowdfunding and community solar approaches that typically aggregate investors to provide loans for individual projects, SolarCity plans to offer debt investments backed by diversified portfolios of solar assets.
Common Assets is led by some pretty impressive people. CEO Tim Newell, who will serve as SolarCity’s Vice President of Financial Products, has been managing director and senior advisor for several cleantech venture capital funds, and for E*Trade. John Witchel, its chief architect, will be SolarCity’s senior technology architect for financial products. He co-founded Prosper, the first person-to-person online lending marketplace in the US.
This is the latest creative investment vehicle SolarCity has come up with. Recently, SolarCity issued a widely hailed $54 million bond backed by cash flows from solar leases. What makes it important? "If the hundreds of millions of dollars in solar leases can be bundled and sold to pension funds and other investors, ‘solar securitization’ could open a potentially huge pool of capital to finance renewable energy expansion as government tax breaks expire," says Sean Kidney of
ClimateBonds.net.
Paying off the bond through cash flow gives it the ability to keep raising money for its next wave of installations, supporting velocity in working capital, while satisfying investors.
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