Bloomberg New Energy Finance estimates that $9.9 trillion will be invested in new zero-carbon power generation capacity through 2050. Yet the deep and sophisticated pools of institutional capital have, by and large, remained untapped as a source of financing for distributed clean energy.

Lenders for these projects have traditionally been project finance banks along with select insurance companies and funds that specialize in renewables. The broader market—including structured product investors—has had few options for direct investment. That’s why we’re working to introduce innovative financial structures that match institutional investor needs.

Placed-in-service solar assets generate steady long-term cash flows with no input costs. For the most part, they’re uncorrelated to the larger asset classes such as equity and fixed income. And portfolios of moderately sized assets (normally about 1 – 20 MW) diversify investor risk. Alternative real assets like these provide current yield and long-term capital preservation, making them an attractive addition to institutional investor portfolios.

Solar portfolios can be fragmented and complex, each in a different geography with disparate public policies, sunlight resources, and energy off-takers. Structured product investors want proven methods to assess an investment’s return profile and risk metrics.

An asset-backed security (ABS) pools diverse assets into a single, standardized investment product with a rating from a credible agency to denote confidence in the underlying assets. ABS’s, like mortgage-backed securities, are a proven product. A portfolio of securitized clean energy assets shares many of the same attractive investment characteristics, and the current marketplace has established plenty of benchmarks off which these deals can be priced.

For institutional investors, who wouldn’t invest otherwise, we’re fitting distributed clean energy opportunities into their comfort zone.