AES in the United States initiated distributed photovoltaic asset securitization

At the end of September, AES Distributed Energy announced the issuance of asset-backed securities (ABS) based on the company's photovoltaic power generation assets, which is an important low-cost
source of capital for photovoltaic project development.
Low-cost capital is the lifeline
of the development of photovoltaic projects and even the photovoltaic market.

Due to the imminent adjustment of the federal investment tax credit (ITC) policy, the mainstream tax equity model as a photovoltaic financing has become less attractive, and new financing models have gradually emerged, and asset securitization (ABS) is one of them
.
Securitization is the pooling of debt from different sources into an asset package that is sold
to investors on the secondary market.

The earliest form of securitization of distributed PV was a $54.
4 million private placement
by SolarCity in 2013.
AES's securitization product this time is the fifth photovoltaic ABS, the remaining 3 from SolarCity and 1 from Sunrun, with a total scale of $560.
5 million
.
AES's portfolio includes 15 projects with a total of 43MW of power generation assets, covering municipal, commercial and residential leases and power purchase agreements (PPAs), with an estimated size of approximately US$100 million
.

AES Distributed Energy, founded this year, began when AES acquired MainStreet Power, a distributed PV project development company with a project size of 300kW-5MW
.
Duke Energy then acquired REC Solar, while Coronal acquired most of the assets
of utility-scale PV developer Helio Sage.

This small upsurge reflects a trend
among utility groups and developers of capital buyout projects.
Morgan Stanley, through its subsidiary, provided financing for AES and underwrote the securitization transaction
.

AES considers the transaction to be "the first PV asset securitization initiated by a utility company.
"
Unlike Sunrun and SolarCity, the promoter, as a utility power group with annual revenues of $17 billion, makes its PV ABS a less risky financing vehicle
.
AES holds more than 35GW of generating capacity, of which 8GW is renewable
.

Chris Shelton, vice president of AES New Energy Solutions, said AES operates in many countries and markets around the world, some of which have high electricity prices and electricity markets in different regions are often independent
of each other.
"In the medium term, we do not see local policy support as necessary to enter these regional markets
," he said.
Previously, he also said: "Despite the attractiveness of the US market, AES still considers opportunities
in other countries and regions around the world.
”

Shelton believes the acquisition of MainStreet gives AES "solid core competencies" in its various strategic markets, with some projects already underway in El Salvador and projects under construction in Dominica and Mexico
.
Shelton said distributed PV in the U.
S.
will be driven
by both the company's durability and flexibility.

"If an enterprising U.
S.
company wants to fully adopt new technology across its global facilities, we can provide it with comprehensive services
in many countries around the world.
" Shelton said that AES can also deploy energy storage
modules for customers if it can increase the economics of the project.

AES relies on its distributed grid, which accounts for 80% of El Salvador's
electricity market.
More than 65MW
of distributed photovoltaic power generation capacity is connected to the grid in North America.

According to people close to the AES securitization deal, "As more and more originators like AES emerge, we will see more large companies with strong assets issuing larger securitization products
.
" The person likened this trend of PV ABS to the current state of securitization in the auto market, investors are attracted by "simple and clear stories and appropriate yields" and "a lot of ABS products come from Honda or Mercedes-Benz's car sales or leasing business.
"

The person also expects AES, a PV asset-backed security, to have A+ and AA ratings, meaning that "investors like Pacific Life and the California Public Employees Pension Fund will also be happy to hold the security.
"

Distributed PV has been familiar to many parties in terms of scale and extent, and has been included in diversified asset pools to reduce capital costs
.
And this is not to take into account that the cost of photovoltaics will continue to fall, and the competitiveness is increasing
.
As a large utility company, AES's distributed photovoltaic asset securitization transaction undoubtedly opens up a new prospect
of photovoltaic ABS.