Swiss Re Corporate Solutions, the commercial insurance arm of global reinsurer Swiss Re, is to provide risk capacity for a 35MW Solar Revenue Put structured by solar risk management provider kWh Analytics.
The deal relates to a portfolio of 4,000 projects located in the Northeast U.S. that are being developed and managed by IGS Solar, a residential and commercial solar provider.
It is the first U.S residential portfolio financed with the support of the Solar Revenue Put and kWh Analytics said that it has now structured its Solar Revenue Put credit enhancement on over $250 million of solar assets.
The IGS Solar portfolio is being funded by a commitment from Ares EIF, the power and infrastructure strategy at global asset manager Ares Management, L.P., as well as a term loan commitment from ING Capital LLC, a financial services company.
The Solar Revenue Put was developed by kWh Analytics to act as insurance policy on solar production and revenues, serving as a credit enhancement for financial investors and accelerating the growth of the solar industry.
Brian Beebe, Head of Origination North America Weather and Energy at Swiss Re Corporate Solutions, commented on the deal: “Swiss Re is committed to managing carbon-related sustainability risks and supporting the transition to a low-carbon economy. We are actively building our business to support the renewable energy that will power our global future. The Solar Revenue Put represents a new, multi-billion dollar insurtech category.”
In September, Swiss Re Corporate Solutions also provided risk capacity for a separate Solar Revenue Put structured by kWh Analytics, which related to 50MW of solar farms in Oregon, owned by GCL New Energy.
“In the solar business, risk is cost,” explained Richard Matsui, Founder and Chief Executive Officer (CEO) of kWh Analytics. “With the Solar Revenue Put, industry-leading sponsors and banks are able to reduce the risk—and therefore the cost—of solar. Less risk, less cost, more solar.”
The Solar Revenue Put has been utilised for portfolios ranging from thousands of residential rooftops to more than ten utility-scale plants, and a recent survey revealed that more than 40% of active lenders value the Put as a credit enhancement.
“We started IGS Solar because we believe in the value of developing alternative sources of energy,” said Mike Gatt, Chief Operating Officer of Distributed Generation at IGS. “To support us in this growth, we were pleased to have found efficient and reliable execution with our partners, ING, Ares, and kWh Analytics. The Solar Revenue Put enables us to both enhance our returns and reduce our downside risk.”
“Starting with our initial investments in 2013, we have continued our leading role as a lender to the residential solar space,” added Scott Hancock, Director at ING. “We are pleased to have incorporated the Solar Revenue Put to support this financing for IGS and Ares.”
Marathon Capital acted as exclusive financial adviser to IGS for the Solar Revenue Put transaction.