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Science/Tech See other Science/Tech Articles Title: Solar Company Uses Contrarian Funding Solar Company Uses Contrarian Funding by Sara Nunnally, Editor, Macro Money Strategist and Tipping Point Prospector I'm not naïve... I know that when folks think of solar power, they think of some crunchy hippie waging sit-ins to save trees and stop oil spills. Big-name investors still dismiss this sector. Our friend Rick Rule famously says, "You know what the problem is with solar? Night." Heck, I've gotten some strongly worded letters from my readers over the years, even after I made triple-digit gains from the renewable energy sector. Sometimes you can't change people's minds, no matter what you do. And that, despite some interest from the mainstream media, makes the solar industry a very contrarian opportunity. In 90 minutes, the sun can provide enough energy to power the world for a full year. The problem with solar power right now is not "night." It's scalability and storage. But that's changing very quickly. Concentrated solar power (CSP) can provide utility-scale installations that link directly into the power grid. And demand is soaring. In late December, Trina Solar (NYSE: TSL) announced a four-year deal to build a 1 gigawatt solar power plant in Western China. That size is on par with a nuclear reactor. And Great Britain announced that it would build large-scale solar plants to generate 2,000 megawatts or more this year. The money is flying. China's solar market is expected to climb 50% this year alone, from 8 gigawatts to 12 gigawatts. In the U.K., investors raised $1.2 billion to fund megawatt-scale projects last year alone. South Africa will be boosting its CSP by 1,300 MW over the coming years, with competitors duking it out for projects. But what I'm finding most interesting about this sector comes from one company: SolarCity (NASDAQ: SCTY). From the January 15 press release: SolarCity today announced plans to launch a new, Web-based investment platform through which it intends to allow a broad range of investors, including both individuals and organizations of all sizes, to participate directly in solar investments that have previously only been available to large financial institutions. "People want to support clean energy development. Customers are seeing the benefits of getting solar for their homes but they would like to participate in other ways as well," said SolarCity CEO Lyndon Rive. "Previously, only institutional investors could participate in the financing of most solar assets. With our investment platform, we're hoping to allow far more individuals and smaller organizations to participate in the transformation to a cleaner, more distributed infrastructure." This is a game-changer. SolarCity plans to offer debt investments backed by its own solar assets in order to fund new projects. And its first issuing went smashingly. In November 2013, the company issued $54 million in solar asset-backed notes with a 4.8% yield maturing in 2026. Deutsche Bank analysts said the deal was more attractive than current tax equity financing SolarCity's next issuing could be as high as $200 million. That's going to boost share prices considerably. Last November, after the $54 million issue, SolarCity shares climbed 4%. But since then, shares have jumped nearly 60%! (My colleague Ryan Cole, editor of Unconventional Wealth, jumped on this story back in November, and his readers are sitting on a tidy gain with a lot more fuel in the tank. You should check out his stuff.) As the company gains more customers, it'll be able to issue even more bonds. And now it's opening up that market to individual investors, too. "We expect billions of dollars of investment through this platform," said CEO Rive. For a $6.36 billion company, this avenue of funding puts SolarCity on the main stage. It could also open the door for other renewable energy and solar companies to follow suit. According to the International Energy Agency, renewable energy generation could increase by 40% in the next five years. And the share of non-hydro generation capacity will double. Those growth figures will be hard for any investor to ignore. Poster Comment: This has got to be better than was Solyndra. ;) Post Comment Private Reply Ignore Thread
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