Market Updates

T-REX Market Update 3/18/2016

By March 18, 2016 No Comments

T-REX Market Update: 3/18/16

  • Marathon Capital: White Paper released with findings on state of the solar ABS market
    • Securitization accounted for only 7% of the solar MW installed in 2015.
    • The increase in solar securitization yields in early 2016 was primarily due to weak macro credit conditions. Investor appetite for yield, net metering risk (Nevada), offtaker credit quality, leverage, duration of underlying collateral contracts, tax equity structure and collateral type also had an impact.
    • 35MW per quarter is the approximate minimum securitization issuance size. The only two companies to issue thus far—SolarCity and Sunrun—have both demonstrated the ability to meet these levels.
    • The value proposition of providing savings on electricity bills remains the primary consideration for loss given default in the residential lease/PPA market. Investor ability to stress default risk is thus crucial.
  • Bloomberg: Solar 2016 ABS volume set to rebound, exceed 2014 levels.
    • SolarCity has raised more in the ABS market this year than the industry completed in all of 2015 ($235M vs. $234M), and developers are poised to exceed the record set in 2014.
    • Marathon expects more companies to follow suit. Vivint Solar Inc., Sunnova Energy Corp., Sungevity Inc. and Spruce Finance Inc. “have also demonstrated ability to deploy megawatts at scale,” according to the report.
    • SunPower Corp. Chief Executive Officer Tom Werner said in the fourth quarter that he would consider doing so this year.
  • GTM: Solar system prices continue to fall
    • Overall PV system pricing in the United States fell by up to 17 % in 2015. The price varied by market segment, with the largest declines in the utility fixed-tilt sector.
    • Price declines leveled off in residential, while in the commercial and utility sectors, prices declined annually by 10% and 17%, respectively.
    • Soft costs remain a major challenge. While hardware costs in residential fell over 16% in 2015, soft costs rose by 7%.
    • In commercial, hardware costs fell by 15% in 2015, while soft costs only fell by 6%. In Q4 2015, soft costs accounted for approximately 50 percent of total system pricing.
  • The Washington Post: Decoupling of CO2 emissions and economic growth confirmed
    • The decoupling of economic growth from CO2 emissions occurs when economic growth occurs without growth in emissions.
    • This occurred in 2014 for the first time in 40 years when the global economy grew by 3.4%, but global CO2 emissions remained constant.
    • According to the IEA, the same thing occurred in 2015: the global economy grew by 3.1%, while global emissions remained flat (and perhaps slightly down from 2014 levels).
    • The IEA attributed the second straight year of decoupled growth and emissions to a greater uptake of renewable energy, particularly wind, and fewer emissions in China and the United States, the two largest emitters by far.

Written by T-REX Associate, Robert Bray



Energy & Infrastructure Project Finance


Structured Credit Markets

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