Partners Robert N. Freedman and Patricia G. Hammes, co-heads of Shearman & Sterling’s Sustainable Development Group, and associate Jackson N.H. Murley published an article in Infrastructure Journal on November 11 titled "US Solar: Of PPA Securitisations, horizons & hurdles."

According to the authors, while falling prices for solar photovoltaic systems are leading to headline-grabbing problems for US manufacturers such as Solyndra, the prospects for solar providers who finance, install, monitor, maintain and repair PV systems may be growing brighter, and securitisation of PV system financing agreements like leases and power purchase agreements (PPA) is being discussed more frequently. As opportunities for securitization emerge, interested financial institutions, solar providers, governments and investors should understand key lease/PPA terms and underlying risks and be aware of hurdles to securitization like establishing rating agency criteria. The article provides an overview of the solar installation and financing market, summarizes key lease/PPA terms and underlying risks, and outlines opportunities and obstacles associated with securitization.

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