Twenty years ago, rating agency analysts disagreed on whether non-AAA corporations could issue AAA-rated structured securities. Aircraft finance was the poster child of the debate. "Impossible. Too volatile," corporate analysts reasoned. Structured analysts would retort: "Not even $1 of securities can be funded at AAA?" And, if $1 can be funded at AAA levels, what about $2? $3? $1 MM?
This spring, R&R got close to the emerging solar securitization market through committee work coordinated through the U.S. Department of Energy's National Renewable Energy Laboratory (NREL), which is working to
promote solar energy and preparing for the imminent (2016) solar tax credit phase-out. In
December 2013, NREL's Travis Lowder and Michael Mendelsohn published a white paper,
The Potential of Securitization in Solar PV Finance, which argues for securitization as replacement funding. R&R discovered that rating agency bias exists against solar PV lease securitization, similar to corporate. The agencies willing to issue ratings (some are not) are capping the rating at low Investment Grade risk levels.
Really? Not $1 of securities backed by energy that continuously self-generates is capable of being rated AAA?
