More Evidence that Solar Loans Are Getting Big: NREL Working Group

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The National Renewable Energy Laboratory convenes a Banking on Solar working group to engage lenders and other stakeholders. The group aims to address the barriers to accessing the solar loan market.

Everyone’s talking about solar loans. Usually it’s in the context of residential solar, but loans can also be a good financing option for commercial solar projects. While they may not overtake leases, we still think solar loans are going to be big. And we’ve been seeing a lot more of them lately.

Still, barriers remain to accessing the solar loan market. So the Energy Department’s (DOE) National Renewable Energy Laboratory (NREL) recently convened the Banking on Solar working group to engage lenders and other stakeholders, with the aim of addressing these barriers.

 

Banking on Solar claims over 50 members that represent the a range of areas in solar, banking, legal, regulatory, and financial industries. The group is focused on standardizing contracts and underwriting processes, as well as educating banks and regulators about the risks and rewards of the solar asset class.

 

The goal? To reduce barriers to entry for banks that wish to diversify their asset base and invest in a market with high growth potential.

 

“There are many states where third-party finance is unavailable and there are solar customers who may prefer to own their systems over leasing them,” said NREL Analyst Travis Lowder in a statement. “A greater prevalence and diversity of loan products could enable higher rates of solar adoption in these markets.”

 

The working group has already begun developing standardized loan documents and underwriting criteria in the residential and commercial markets. The group is also looking at other solar debt markets, such as lending into tax equity capital structures.

 

The Banking on Solar working group is operating in parallel with the SunShot Initiative-funded, NREL-led Solar Access to Public Capital (SAPC) working group. SAPC is designed to facilitate capital market investment via securitization.

 

“The two initiatives are complementary, as securitization offers banks an opportunity to free up their balance sheets and expand their loan activities,” Lowder said. “The knowledge gained from quantifying solar risks under the SAPC mock ratings process is highly relevant to solar lenders.”

 

The effort is supported by the Department of Energy’s Office of Energy Efficiency and Renewable Energy through the SunShot Initiative. Banking on Solar will host several webinars in the months ahead to introduce banks to the solar asset class. The group will also have a presence at several upcoming banking conferences around the United States.

 

Banking on Solar has a long list of participants:

 

  1. Admirals Bank

  2. AFC First Financial Corporation

  3. American Bankers Association

  4. Bank of America Merrill Lynch

  5. Blank Rome LLP

  6. Bloc Power

  7. Bridge Bank

  8. Callahan & Associates

  9. Capital City Bank

  10. Capital Fusion Partners

  11. Citi

  12. City University of New York

  13. Clean Fund

  14. CleanPath

  15. Clean Power Finance

  16. The Climate Bonds Initiative

  17. Coalition for Green Capital

  18. Community Development Financial Institutions Fund

  19. Congressional Bank

  20. Connecticut Clean Energy Finance and Investment Authority

  21. Digital Federal Credit Union

  22. DLA Piper

  23. Energi

  24. Energy Programs Consortium

  25. Energy Sense Finance

  26. Enphase

  27. Environmental Defense Fund

  28. Greater Cincinnati Energy Alliance

  29. Harcourt Brown & Carey

  30. HelioPower

  31. Independent Community Bankers of America

  32. Kilowatt Financial

  33. K&L Gates LLP

  34. Latham & Watkins LLP

  35. Lawrence Berkeley National Laboratory

  36. LendKey Technologies

  37. M-Core Credit Corporation

  38. McHenry Savings Bank

  39. MJM Consulting

  40. Mosaic National Cooperative Bank

  41. Nautilus Solar

  42. New York Green Bank

  43. New York State Energy Research and Development Authority

  44. NextEra Energy

  45. OneRoof Energy

  46. Patton Boggs

  47. PNC

  48. R&R Consulting

  49. Rabobank

  50. Renovate America Inc.

  51. Rocky Mountain Institute

  52. Sandia National Labs

  53. Self Help Credit Union

  54. Skadden, Arps, Slate, Meagher, & Flom LLP

  55. SolarCity

  56. Solar Energy Industries Association

  57. Sungage Financial

  58. SunPower

  59. U.S. Bancorp

  60. VectraBank

  61. Wiser Capital

  62. Zions Energy Link