SolarCity Plans to Offer Asset-Backed Debt to Retail Investors

Photographer: Thor Swift/The New York Times via Redux

SolarCity employees install photovoltaic panels on the roof of a house in San Leandro, Calif. on Dec. 9, 2013. Close

SolarCity employees install photovoltaic panels on the roof of a house in San Leandro,... Read More

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Photographer: Thor Swift/The New York Times via Redux

SolarCity employees install photovoltaic panels on the roof of a house in San Leandro, Calif. on Dec. 9, 2013.

SolarCity Corp. (SCTY), the first U.S. company to sell bonds backed by rooftop solar panels, plans to offer similar products to individual investors.

The company expects to introduce within six months an online system for retail investors to provide debt for SolarCity’s rooftop power plants, according to a statement today.

The system will provide one of the few opportunities for individuals to back renewable-energy projects, which generate steady revenue from selling electricity and may be less risky than equities. The arrangement also provides a new source of funding for San Mateo, California-based SolarCity, said Chief Executive Officer Lyndon Rive.

“The more sources of capital for solar investments, the more competition and hopefully it will lower financing costs,” Rive said in an interview. He didn’t provide details on the potential returns for investors.

The company is following Oakland, California-based Mosaic Inc. in offering retail investors a share of the revenue stream from financing solar-power systems. Mosaic was founded in April 2011 and has facilitated more than $5.6 million in funding.

“We expect billions of dollars of investment through this platform,” Rive said. He declined to provide a more precise amount or time frame. The company will use the funds to refinance its portfolio of completed solar projects.

The lending technology was developed by Common Assets LLC, which SolarCity bought. The company’s two employees have both joined the solar provider to manage the web-based investment system, according to the statement.

SolarCity installs rooftop solar systems for customers who typically pay little to nothing up front and sign long-term contracts to buy the power.

It sold $54.4 million in bonds on Nov. 13 with a 4.8 percent interest rate, and is planning to offer as much as $200 million of additional notes. The company needs regular injections of capital to fund new solar plants.

To contact the reporter on this story: Christopher Martin in New York at cmartin11@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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