This is your SolarWakeup for August 8th, 2016

One of the issues in solar is that few things have scale. And the things that have scale or volume can get commoditized very quickly. As the lease appears to be in flattening or decline, the loan is making up the difference. Loans and in direct competition with PACE where PACE is available. PACE is harder to commoditize but barrier to entry on the loans is very low. The loans are going to be helpful to the local installers that are seeking to build 50-100 systems per year versus the public companies that need 10s of thousands. Loans are not without issue either because at $20k a deal, you need a very efficient and smooth process to make sure that the fees don’t eat the margin. Interesting about Mosaic’s raise is that it is said that the $220mm is not to pay for the loans instead to grow the platform but surely there is more that story because the platform shouldn’t need $220mm for the platform. Warburg follows many other PE firms looking to get the flow of structured products coming from solar.

Opinion

Have a great day!

Yann