Benefits to Finding New Ways To Finance Solar Power Projects
Renewable Energy Trust Capital, Inc. (RET) is exploring new ways to finance solar power projects. One of those strategies, using the REIT structure, anticipates lowering the cost of capital dramatically, cutting the cost of generating solar power by up to 20 percent. It would also expand the investor pool by giving everyone from individuals to institutions an easy and liquid way to own a piece of the fast-growing solar market.
“We believe this is a chance to use U.S. capital markets to effectively bring the cost of solar photovoltaic electricity down quickly, and to broaden participation in investing in clean energyâ€”and to do it in a way that makes it easier for solar power plants to turn a profit,” said John A. Bohn, CEO of RET. Bohn has served as Commissioner of the California Public Utility Commission, president and CEO of Moody’s Investor Services, and Chairman and CEO of the U.S. Export Import Bank during the Reagan Administration.
Asset financing for U.S. photovoltaic (PV) projects has grown by a compound annual growth rate of 58 percent since 2004, according to Bloomberg New Energy Finance, which projects about $6.9 billion in annual additional investment through 2020. A McKinsey study also projects continued robust growth, estimating that another 80 to 130 gigawatts of new solar PV generating capacity will come online in North America by 2020.
REITs, which have been in use for decades, are stable and well understood, offering investors significant tax breaks and a guaranteed distribution of 90 percent of a REIT’s taxable income. REITs are also liquid, trading on the open market just like mutual funds.
“RET is extending a mature and fully-developed financing mechanism to a new asset class, in the same way REITs have done over and over. Innovation is a normal part of the REIT industry,” said Christian Fong, RET’s chief financial officer. “REITs became the dominant investment vehicle for commercial real estate, and then evolved to include real estate-dependent sectors from cell phone towers to data centers to energy transmission. And through RET, we believe they can soon be a key investment vehicle for accelerating the growth of solar power.”
“It would be the ultimate democratization of funding and support for the solar industry,” said Karen Morgan, RET’s president. “Individuals can actively invest, knowing their dollars will put up more panelsâ€”while buying them a piece of the action in the fast expanding clean energy sector.”
The veteran leadership team at RET, based in San Francisco, is dedicated to facilitating the transition to a clean and sustainable economy. RET is sponsored by the California Clean Energy Fund (CalCEF), a leading investor in promising platforms that spur the growth of clean energy generation through advancements in finance, public policy and technological innovation.
“It’s well known that the U.S. solar industry’s rapid expansion has been limited by financing bottlenecks,” said Dan Adler, president of CalCEF. “RET’s transformational approach will help un-block capital flows, using proven financial techniques long available in other industries, and accelerate the expansion of clean energy.”
Renewable Energy Trust Capital, Inc. (RET) is focused on developing innovative alternative financing tools to dramatically lower the cost of capital for solar generating assets while broadening investor pools. RET is dedicated to facilitating the transition to a clean energy economy.asset financing, renewable energy trust, san francisco california
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