Solar financing news roundup: EnerBank bought by Regions, Goodleap transaction rated by S&P
Residential solar financing is becoming more mainstream and allowing for better terms and greater access to solar installers and their customers. Residential solar and the broader sustainable home solutions market is estimated at $430 billion annually, with solar installations forecasted to quadruple by 2030, according to the research firm Wood Mackenzie. They further estimate that loans will make up 62% of the residential solar market this year and remain the dominant way for a homeowner to pay for solar. Here are some recent developments from solar loan providers.
Regions Bank purchased home improvement lender EnerBank USA last week to be part of its Consumer Banking Group. Salt Lake City-based EnerBank serves contractors and homeowners through a series of loan programs and financing solutions that support a wide range of home improvement needs.
“In recent years, we have seen tremendous demand not only for mortgage and refinancing solutions but also for new options to finance upgrades people are making to their homes,” said Scott Peters, senior executive vice president and head of the Consumer Banking Group for Regions. “With a client base that stretches across the U.S., The services provided by EnerBank will enable Regions to deliver a more complete range of options as part of our focus on serving as the premier lender to homeowners.”
EnerBank has worked with hundreds of loan program sponsors, inclusive of thousands of home improvement contractors, serving over a million homeowners and funding over $12 billion in home improvement projects.
EnerBank will maintain its headquarters presence in Salt Lake City, with many team members scheduled to occupy portions of 650 Main, a modern Class A office and retail complex under development downtown. The division will continue to be led by Charlie Knadler who will join Regions as part of the Consumer Banking Group.
GoodLeap closed an Asset-Back Securitization (ABS) sponsored by Goldman Sachs & Co. LLC that is backed by approximately $369 million of residential solar loans originated on the GoodLeap platform. The transaction, rated by S&P Global Ratings, is the first ever residential solar transaction to be rated by one of the three major rating agencies. All tranches of the transaction were multiple times oversubscribed.
This inaugural S&P rating comes as ESG investing is seeing record inflows, with money managers identifying climate change as the most important, specific ESG issue. In the U.S. alone, an estimated $10 trillion in capital will need to be invested in sustainably focused products like residential solar over the next decade to achieve net zero emissions by mid-century. S&P, along with the other two major rating agencies, will play a crucial role in unlocking much of this capital as many large financial institutions like insurance companies and asset managers have corporate mandates that require a rating from a major rating agency in order to participate in an ABS transaction. This institutionalization of ESG assets will, in turn, help lower borrowing costs and ultimately drive growth in sustainable home improvement products by providing consumers with access to more affordable payments options.
“We are proud to have worked with GoodLeap to achieve this rating milestone and are excited to see residential solar become an asset class more accessible to institutional investors. Our longstanding relationship with GoodLeap showcases the impact we can have, the result being significantly more capital available at a lower cost for homeowners,” said Katrina Niehaus, head of corporate structured finance at Goldman Sachs
“This incredible milestone for residential solar is a testament to the hard work and dedication of the GoodLeap team who work tirelessly to ensure that the quality and performance of these assets meet the requirements of major rating agencies such as S&P,” said Tanguy Serra, GoodLeap’s President and Chief Investment Officer. “Having an S&P rating for this and future securities will ensure there is ample capital available for our industry’s growth while providing consumers with affordable payment options for their carbon-reducing products.”
This securitization, sponsored by Goldman Sachs & Co. LLC, consists of a total of $304.5 million of notes rated by S&P Global Ratings and Kroll Bond Rating Agency. The notes are backed by $369 million of principal balance of loans with a weighted average note rate of 2.09%. At the time of origination, the weighted average FICO® score of the loans was 741
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