Aggregation and Securitization

Green Banks employ a variety of strategies to unlock capital and drive investment into clean energy projects. Green Bank investment strategies have included participating in projects at the development phase, or under new regulatory regimes, with an eye towards spurring larger portfolios or securitizing completed projects to improve their marketability to traditional investors. Green Bank investments also include making cornerstone investments in project portfolios or in first-of-a-kind Green Bonds to encourage additional institutional investment in clean energy projects.

This paper discusses several examples of Green Banks working to facilitate private investment in projects through strategies of aggregation and securitization. The goal of this paper is to highlight successful Green Bank aggregation and securitization strategies to present best practices for unlocking new sources of private capital. The paper will first present an overview of securitization and aggregation before covering several specific Green Bank transactions.

There are three high-level roles that Green Banks take outlined in the paper: 1) Green Banks and partners working as loan/lease/power purchase agreement/energy savings agreement originators who aggregate projects into a warehouses; 2) Green Banks and partners acting as capital providers to originators/aggregators so that they may create, or increase the size of, asset portfolios or warehouses; and 3) encouraging, via cornerstone investment, large-scale and institutional investors to buy securitized assets after the originator/aggregator bundles assets for sale. Green Banks can play an active or supporting role in these various financing strategies to increase private sector participation in green projects in their local markets.