Could Securitization Democratize Solar Power?
After Wall Street popularized the term “mortgage-backed securities” in their destruction of the economy in 2008, you could be forgiven for thinking “solar securities” are a pyramid scheme. But in truth, they may hold the key to democratizing the financing and the ownership of distributed renewable energy.
Right now, financing solar typically means looking for a “tax equity” partner who will provide some upfront cash to build a solar array in exchange for helping to use the federal tax incentives for solar. These are business deals, and the tax equity folks may demand a 30% return on their equity (or more). This means a higher price for solar power that has nothing to do with the cost of producing electricity and everything to do with poor policy design.