Dive Brief:
- Ygrene Energy Fund closed two bond offerings for Property-Assessed Clean Energy (PACE) loans totaling $329 million, the clean-energy finance company confirmed on its web site this week.
- The loans will target improvements in California and Florida. The larger of the two bonds was a $184 million public securitization with the industry's first AAA rated PACE assets, the company said.
- Around the country, the energy sector is turning to PACE financing to access efficiency upgrades that traditional financing would not support. The loans target high up-front project costs by allowing homeowners to pay off energy upgrades over time on their property taxes.
Dive Insight:
There's a surge of "green bonds" in the market, Greentech Media reports, and a big part of that is a new focus on PACE financing.
The renewed interest in PACE financing came into play last year when President Obama took a slate of actions aimed at growing renewables and distributed energy, including new loan offerings and a reworked PACE program. The new guidance allowed homeowners with Federal Housing Administration mortgages to purchase properties with solar panels deployed under the PACE program.
In September, California Gov. Jerry Brown (D) signed legislation to create an industry-wide framework for PACE loans that aims to educate consumers on terms while helping them reduce utility bills and energy usage. And this spring, Nebraska lawmakers passed a measure allowing PACE financing, including a $5 million cap on any single PACE bond.
"We saw exceptional demand for this deal, with both A and B notes being oversubscribed," Rasool Alizadeh, Ygrene's senior director of capital markets and asset backed securities, said in a statement. "The diversity of our product offering and geographies helped attract a broad range of investors."
Ygrene says it has completed three offerings, and next year could do four worth at least $750 million. The bonds have a AAA rating, which company officials say indicates the "propitious future of PACE assets."
"The structure of this deal can serve as a model for the PACE industry as it matures," said Ygrene CFO Michael Chan.