Clean energy: Solar and property-assessed clean energy (PACE)

While traditional sectors of the energy industry such as coal and oil and gas are experiencing distress (see “Energy sector not out of the woods yet”), renewable energy is expanding. The sector boasts 10.3 million jobs globally (as of 2017), with renewable energy providing one-fifth of the world’s electricity supply.

Investors seeking higher yields in a low-interest-rate environment are increasingly buying into securitization deals involving clean energy assets, which, due to their novelty and complexity, command higher returns. A leader in the securitization of esoteric assets, Kramer Levin has advised on many first-of-their-kind transactions over the years, including securitizations of solar assets, property-assessed clean energy (PACE) programs (which allow property owners to finance upfront energy costs and improvements and pay them back as a tax assessment) and energy efficiency installations at federal facilities; asset-backed securities backed by intellectual property, timeshares and commercial mortgages; and M&A transactions using securitization as the source of financing.

In the clean energy sector, we were deal counsel on the first-ever securitization of solar assets, the largest solar securitization to date and the first-ever residential PACE securitization. We are also currently involved in several innovative transactions involving commercial PACE assets.