The U.S. clean energy firm SolarCity Corporation (SCTY) has unveiled the first registered public offering of solar bonds for retail investors in the country. This latest announcement is aimed to provide them with an opportunity to participate in the growing and transforming U.S. energy landscape as the company had previously issued solar bonds exclusively for financial institutions and corporations.
Accumulation of funds from retail as well as institutional investors and government contribution will collectively allow SolarCity to meet its capital requirement for numerous ongoing renewable ventures.
SolarCity initially plans to issue up to $200 million in solar bonds. The company has already filed a registration statement with the Securities and Exchange Commission related to the latest offering.
To offer direct access to consumers, SolarCity has initiated a new investment website, solarbonds.solarcity.com, an online platform for purchasing solar bonds. Investors can buy bonds, at interest rates of up to 4%, for amounts as small as $1,000. The bonds will have maturity tenure ranging between one to seven years.
Earnings from the solar bonds will be generated through the collection of solar payments from homeowners, schools, businesses and government organizations across the U.S.
The issuance of solar bonds will provide an option to individuals to invest in a new instrument. As solar bonds bear a higher coupon rate than other savings and fixed income products like savings accounts and treasury as well as municipal bonds, it will likely attract investor attention to a larger extent.
SolarCity follows numerous initiatives for expanding its footprint in the U.S. The company had formed a pool of fund, worth around $5 billion, with several financial institutions and corporations. It intends to utilize the same for expanding its renewable energy assets.
In Sep 2014, SolarCity announced that it will build 20 new operations centers in 7 states of the country. The company is scheduled to complete this program in 2014. The objective of the program is to reduce service and installation drive times. This is expected to enable SolarCity to serve customers more efficiently.
This venture is expected to generate more than 600 jobs. In addition, SolarCity announced that it will construct a solar panel manufacturing factory in Buffalo, NY.
Apart from SolarCity, its domestic peer SunPower Corp. (SPWR) is currently taking several initiatives to popularize solar energy in the U.S. In Jul 2014, SunPower inked a contract with Hannon Armstrong Sustainable Infrastructure Capital, Inc. (HASI). Per the agreement, Hannon Armstrong will provide up to $44.5 million in non-recourse debt. The purpose of the agreement is to support SunPower's residential solar lease program.
SolarCity currently holds a Zacks Rank #4 (Sell). However, a better-ranked stock in the same sector worth considering is Canadian Solar Inc. (CSIQ) with a Zacks Rank #1 (Strong Buy).
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