NEW YORK, NY (October 17, 2012) - Kroll Bond Rating Agency (KBRA) published a report today that evaluates the credit risks in solar securitizations. The report provides a snapshot of the current state of the rooftop solar sector and a summary of the credit risks associated with solar securitizations.
The solar sector has experienced unprecedented growth over the past five years due to declining panel prices, federal and state tax incentives, and renewable portfolio standards (RPS) that require a certain percentage of a utility’s power generation to come from renewable energy sources. Kroll Bond Rating Agency, Inc. (KBRA) expects the rate of growth of utility scale installations to slow over the next few years as many utilities have complied with their short to medium term RPS mandates. However, installations on residential properties will likely continue to increase at record rates as panel prices remain depressed and homeowners benefit from relatively inexpensive solar electricity. The report discusses how the purchase of rooftop solar systems requires a significant upfront capital investment and how it may take a number of years before the costs are recouped. Because of the large investment and long payback period, many residential and commercial property owners have decided to enter into leases or power purchase agreements (PPAs) with solar developers. Under these agreements, the consumer receives solar electricity at below-retail rates and the project developer receives a predictable ongoing revenue stream. The developer also retains all state and local tax incentives associated with the solar system because ownership has not been transferred to the consumer.
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Kroll Bond Rating Agency, Inc. (www.krollbondratings.com) is registered with the SEC as a nationally recognized statistical rating organization (NRSRO). Kroll Bond Rating Agency was established in 2010 to restore trust in credit ratings by establishing new standards for assessing risk and by offering accurate, clear, and transparent ratings.
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