Asset-backed Securities: A Complete Clean Energy Finance Guide
Clean Energy Finance Solutions Center
This resource—which is one on many instrument summaries offered by the Clean Energy Finance Center—provides in-depth information about asset-backed securities, including best practices, case studies, design and implementation information, experts and training opportunities.
An asset-backed security (ABS) is any financial instrument that is collateralized (“backed”) by a pool of cash-flow-generating assets other than real estate and mortgages. Typically, these instruments are based on consumer receivables, such as payments on auto loans, credit card debts and student loans. Renewable energy leases, power purchase agreements and loan contracts—all of which can generate a steady cash stream from month to month—can be securitized into ABS instruments. However, solar photovoltaic (PV) technology has proven particularly amenable to securitization because it can be deployed in small units across a range of geographies to a range of offtakers. Aggregating these small units into larger portfolios allows for risk diversification that is more difficult to achieve with smaller portfolios of larger projects.