Renewable energy’s financing future

Author: Zoe Thomas | Published: 10 Nov 2014

A combination of securitisation and yieldco structures are the best path forward for financing renewable energy projects in the US, according to lawyers in the region.

Both financing techniques have gained traction in the last 18 months as a means of acquiring cheaper market capital. The moves come as the renewable energy tax incentives that have allowed the market in the US to develop are pulled back.

Both yieldco and securitisation structures allow sponsors to tap investors, rather than rely on bank capital, but each is suited for a different end of the market.

According to Dirk Michels, a partner at K&L Gates, residential and small-scale commercial projects will be financed mostly through asset backed securitisations. Yieldcos which are more efficient for large-scale projects will be used more to finance commercial and utility solar and wind projects.

"I see going forward a very nice co-existence and synergy between yieldco...