Walmart agreed in September to buy electricity from systems that SolarCity of San Mateo California, will install on as many as 60 stores in California. The anticipated revenue from those contracts may be packaged into securities (bonds) worth about $117 million.
It would be one of the first solar-backed securities based on contracts and Wal-Mart’s ultimate plans is to have rooftop solar installed at 130 stores in the state by 2014 said Anthony Kim, a solar analyst for Bloomberg New Energy Finance. The portfolios of solar contracts have become “large enough to attract investors,” said Kim.
Thousands of contracts are in place with homeowners and commercial organizations with SunRun of California, Solar City of San Mateo and Sungevity, Inc. of Oakland California. The three companies are the largest solar companies in California who are contracted to install solar systems on rooftops. They install systems without charging for the installations with customers leasing the systems or buy electricity on a 20 year contract for an average of 15% less than regular power rates
Bonds tap into the global market for investors making it faster to help finance these projects estimated at $416 billion in 2011. Because rooftop solar project have limited track record, the investors must be willing to take little more risk for the income stream.
Traditionally bonds have been issued with the backing of assets such as credit cards receivables or loans with collateral such as cars and houses. There are even bonds issued against royalty fees for popular songs.
Although the bundling of sub-prime mortgage bonds triggered the 2008 global financial crisis, Solar securities may be less risky than bonds backed by mortgages or credit-card receivables.
Tanguy Serra, president of Vivint Inc., an energy management systems company in Provo, Utah says consumers will default on other bills before they stop paying for electricity which is why there is less risk.
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