Solar power assets included in “AAA” commercial bond offering

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Dividend Solar recently received the industry’s first AA rating for a bond, a California community choice aggregator received an investment grade rating, and a follow up analysis on SunRun’s first bond offering performed in line with the agency’s best case scenario.

All of these point to financial companies being able to package up solar projects and sell them to long term investors. And this means lower interests rates, acceptance of higher risk customers, and more solar.

As the latest, CleanFund Commercial PACE Capital has closed on a $103 million, AAA-rated note, which contains projects on 82 properties across six states (PDF). Contained within this portfolio are a number of solar assets, and Bloomberg says the company expects a similarly sized offering next year.

CleanFund states that this is the first portfolio exclusively backed by “C-PACE property assessments issued pursuant to rule 144A under the Securities Act of 1933”. Last year, a C-PACE package of debt was privately placed, but this Rule 144A transaction is the first to be marketed to a wide base of institutional investors.

Institutional investors represent $100 trillion of global assets, and getting these investors to participate in solar has long been a goal of the industry. PACE could be one tool to do that, as explored in a SEIA report: Expanding Solar Deployment Opportunities in the C&I Sector: An Introduction to Property Assessed Clean Energy.

CleanFund’s first-ever commercial PACE (C-PACE) public securitization includes energy and other improvements to properties across the United States. Clockwise from upper left

  • the 17-story Statehouse Square office building in Harford, Connecticut
  • The River shopping center in California’s Coachella Valley
  • the 510,000 sq. ft Butler Bros. building in Dallas, Texas
  • an 80,000 sq. ft office building in Glendale, California
  • the 45,000 sq. ft mixed-use building at 644 Broadway in San Francisco
  • historic Camelot Theatres in Palm Springs, California.

A specific solar power project described in the Presale Ratings Summary (PDF), was a loan taken by Pacific Ethanol Madera for $10 million, with a 5.6% interest rate payable over 20 years. The project is a 5 kW-DC ground mount solar power array, expected to be completed sometime this month. As of July 26, 84% of the funds had been disbursed.

A second solar project included in the portfolio is a $2.4 million, 667 kW-DC carport at The River (top right image above) at Rancho Mirage. The carport covers 95% of the mall’s common area electrical use.

A third solar project (lower left image above) is the Camelot Theatre in Palm Springs, CA. The project combined 73.6 kW of solar power and an Ice Bear cooling system.