SolarCity and BofA Merrill Lynch are launching the first large-scale aggregated fund to support residential rooftop solar. Today the companies announced that SolarCity received all commitments to its $250 million financing facility. Under the facility the rooftop solar provider plans to install roughly 200 megawatts of rooftop solar across the country and plans to refinance the facility in the securitization market.
It’s not that the $250 million facility is the largest ever raised to support solar rooftops—it’s not. Last year SolarCity announced a $500 million fund with Goldman Sachs that it used to finance solar projects. That fund allowed anyone in SolarCity’s service areas with credit ratings over 680 to go solar.
But this is the first time such a large fund in the solar rooftop sector of the solar industry will be backed by securities. Last November the company tested the waters with a $54.4 million placement of securities to finance its third-party owned rooftop solar installations. Those securities are designed to pay investors an annual 4.8 percent interest rate and will mature on Dec. 21, 2026.
By securitizing these funds, companies like SolarCity can help reduce the cost of investing in solar for home and business owners. Since the financing is aggregated and securitized over a pool of solar installations under which home and business owners are paying for the solar power their arrays generate, it spreads that a customer may default on payments over a broader pool. As such it reduces the risk to investing in the pool, allowing the homes to produce long-term returns at lower investment rates than they could otherwise have access too.
At this point, however, details of the new offering are scant. SolarCity said today that the financing was provided by a group of lenders that includes BofA Merrill Lynch as Sole Structuring Agent and Sole Syndication Agent. “The loan is backed by high quality, long-term customer receivables that allow the company to deploy, aggregate and season a defined pool of assets,” SolarCity said. After it has deployed the solar systems funded by the initial loan SolarCity expects to refinance the facility in the securitization market.Tweet