Financing U.S. Renewable Energy Projects Through Public Capital Vehicles: Qualitative and Quantitative Benefits

Mendelsohn, Michael; Feldman, David

doi:10.2172/1076663

Cited by 13 publications

(10 citation statements)

References 3 publications

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“…TPO systems can also pose a challenge to selling a home owing to the lack of broad understanding of solar's benefits, beyond the appraisal, which potentially restricts potential 37 Structuring public capital vehicles is also expensive and time consuming but can be applied to a much larger pool of projects, thereby distributing the set-up fees and lowering the costs to individual projects (Mendelsohn and Feldman 2013). 38 The study also cited other sources that estimate a 50% forfeiture in value for solar projects.…”

Section: Historical Challenges To Tpo Of Residential Pv Systemsmentioning

confidence: 99%

On the Path to SunShot: Emerging Opportunities and Challenges in Financing Solar

David

Bolinger

2016

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Preface The U.S. Department of Energy launched the SunShot Initiative in 2011 with the goal of making solar electricity cost-competitive with conventionally generated electricity by 2020. At the time this meant reducing photovoltaic and concentrating solar power prices by approximately 75%relative to 2010 costs-across the residential, commercial, and utility-scale sectors. To examine the implications of this ambitious goal, the Department of Energy's Solar Energy Technologies Office (SETO) published the SunShot Vision Study in 2012. The study projected that achieving the SunShot price-reduction targets could result in solar meeting roughly 14% of U.S. electricity demand by 2030 and 27% by 2050-while reducing fossil fuel use, cutting emissions of greenhouse gases and other pollutants, creating solar-related jobs, and lowering consumer electricity bills. The SunShot Vision Study also acknowledged, however, that realizing the solar price and deployment targets would face a number of challenges. Both evolutionary and revolutionary technological changes would be required to hit the cost targets, as well as the capacity to manufacture these improved technologies at scale in the U.S. Additionally, operating the U.S. transmission and distribution grids with increasing quantities of solar energy would require advances in grid-integration technologies and techniques. Serious consideration would also have to be given to solar siting, regulation, and water use. Finally, substantial new financial resources and strategies would need to be directed toward solar deployment of this magnitude in a relatively short period of time. Still the study suggested that the resources required to overcome these challenges were well within the capabilities of the public and private sectors. SunShot-level price reductions, the study concluded, could accelerate the evolution toward a cleaner, more costeffective and more secure U.S. energy system. That was the assessment in 2012. Today, at the halfway mark to the SunShot Initiative's 2020 target date, it is a good time to take stock: How much progress has been made? What have we learned? What barriers and opportunities must still be addressed to ensure that solar technologies achieve cost parity in 2020 and realize their full potential in the decades beyond? To answer these questions, SETO launched the On the Path to SunShot series in early 2015 in collaboration with the National Renewable Energy Laboratory (NREL) and with contributions from Lawrence Berkeley National Laboratory (LBNL), Sandia National Laboratories (SNL), and Argonne National Laboratory (ANL). The series of technical reports focuses on the areas of grid integration, technology improvements, finance and policy evolution, and environment impacts and benefits. The resulting reports examine key topics that must be addressed to achieve the SunShot Initiative's price-reduction and deployment goals. The On the Path to SunShot series includes the following reports: • Emerging Issues and Challenges with Integrating High Levels of Solar i...

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Section: Historical Challenges To Tpo Of Residential Pv Systemsmentioning

confidence: 99%

On the Path to SunShot: Emerging Opportunities and Challenges in Financing Solar

David

Bolinger

2016

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“…Additionally, capital raised through securitization generally has lower costs than the industry's most common sources of funding, namely debt, tax equity, and sponsor equity. Increasing the use of public capital to finance renewable energy projects through securitization and other financial instruments could lower the cost of installed PV systems and accelerate solar deployment (Mendelsohn and Feldman 2013). NEM policy uncertainty can affect securitization efforts.…”

Section: Text Box 1: Effects Of Uncertainty On Solar Securitizationmentioning

confidence: 99%

Compensation for Distributed Solar. A Survey of Options to Preserve Stakeholder Value

Flores-Espino¹

2015

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This report provides a framework of mechanisms that address compensation for PV owners, alternative retail rate design, and utility value preservation. A complementary report, Impact of Rate Design Alternatives on Residential Solar Customer Bills: Increased Fixed Charges, Minimum Bills and Demand-Based Rates, presents data and modeling results to examine impacts of rate design alternatives on customer electricity bills. Together, these NREL reports address some of the issues at the intersection of utility policy and compensation mechanisms for distributed generation customers.

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“…Federal credit enhancement has played a role in the development of several industries. By providing a "first loss" reserve, the government guarantees, partially or in full, the liabilities of a project towards its lenders (Frisari et al, 2013;Mendelsohn and Feldman, 2013). This has been done by both the Federal Housing Administration (FHA) -mortgage guarantees, and the Small Business Administration -business loans guarantees (Sanders et al, 2013).…”

Section: Credit Enhancementmentioning

confidence: 99%

“…Solar asset-backed securities (ABS) are being explored as a promising option (Bolinger et al, 2009;Bolinger, 2009;Wilkins, 2002;Pietruszko, 2006;Branker et al, 2011b). By delivering access to the more than $100 trillion pool of wealth managed by institutional and other investors, solar ABS has the potential to lower financing costs, and expand access to funding (Mendelsohn, 2013;UPI, 2011). This could be particularly beneficial to the development of smaller scale solar projects, where the funding environment is particularly challenging (Miller, 2012).…”

Section: Introductionmentioning

confidence: 99%

Securitization of residential solar photovoltaic assets: Costs, risks and uncertainty

Alafita

Pearce

2014

Energy Policy

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Limited access to low-cost financing is an impediment to high-velocity technological diffusion and high grid penetration of solar photovoltaic (PV) technology. Securitization of solar assets provides a potential solution to this problem. This paper assesses the viability of solar asset-backed securities (ABS) as a lower cost financing mechanism and identifies policies that could facilitate implementation of securitization. First, traditional solar financing is examined to provide a baseline for cost comparisons. Next, the securitization process is modeled. The model enables identification of several junctures at which risk, and uncertainty influences costs. Next, parameter values are assigned and used to generate cost estimates. Results show that, under reasonable assumptions, securitization of solar power purchase agreements (PPA) can significantly reduce project financing costs, suggesting securitization is a viable mechanism for improving the financing of PV projects. The clear impediment to the successful launch of a solar ABS is measuring and understanding the riskiness of underlying assets. This study identifies three classes of policy intervention that lower the cost of ABS by reducing risk or by improving the measurement of risk: i) standardization of contracts and the contracting process, ii) improved access to contract and equipment performance data, and iii) geographic diversification.

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Financing U.S. Renewable Energy Projects Through Public Capital Vehicles: Qualitative and Quantitative Benefits

Cited by 13 publications

References 3 publications

On the Path to SunShot: Emerging Opportunities and Challenges in Financing Solar

On the Path to SunShot: Emerging Opportunities and Challenges in Financing Solar

Compensation for Distributed Solar. A Survey of Options to Preserve Stakeholder Value

Securitization of residential solar photovoltaic assets: Costs, risks and uncertainty

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