Kroll Brand Rating Agency UK released a report on Europe’s potential for asset-backed securities (ABS) based on solar photovoltaic (PV) panel financing collateral. In the United States, this market has been a growing part of the securitization landscape for the past seven years, accounting for $8.6 billion issued in 2022 alone. This contrasts with Europe, where the securitization market has yet to become a source of capital funding for the expansion of rooftop solar PV lending. In this report, KBRA explains some of the market dynamics, how the product is structured in the United States and how the European market may develop in the future.

Key Takeaways

• Solar PV energy production is a key part of a transition to renewables and the EU’s energy security roadmap.
• The EU could potentially produce up to 680 terawatts per hour of solar electricity annually from solar PVs on rooftops, representing almost 25% of current electricity consumption.
• The US solar ABS market increased to $8.6 billion issued in 2022 from $1.4 billion in 2016, supporting the expansion of solar PV adoption with capital market funding of over USD27 billion.
• The EU’s 2030 solar generation targets will require significant funding, of which solar ABS securitization could offer support.