Developing Aggregated Datasets to Standardize the Collateral Valuation Process Utilizing an Economic Pricing Model

Due to the difficulty in developing credible opinions of value for solar assets, there is a disconnect between traditional mortgage lending which uses established appraisal methodologies and current solar lending efforts which are limited in their ability to utilize those same tried and true appraisal methodologies. This disconnect restricts the amount of capital available for the solar market even if a homeowner is willing and able to borrow the funds for the installation of solar on their home. This is further evidenced in the average cost of capital for the residential PV system marketplace of 12.5%-nominal in 2012 vs. a comparable 1st mortgage rate of 3.66%-nominal. Residential solar PV assets are treated more like personal property for lending purposes instead of collateral for a loan which can then be securitized. This limited access to capital and the higher cost of that capital leads to a slower adoption rate of solar in
our local communities. This barrier in developing credible opinions of value can be eliminated through data collection efforts that result in the effective application of an economic pricing model, similar to what the NADA or Kelley Blue Book has done for the automobile industry in allowing a lender to make a loan before the car is purchased. This will result in a verifiable solar asset value that lenders can confidently use as the collateral value for a loan. By solving the collateral valuation issue, the marketplace can then provide greater access to capital and at a lower cost than is currently available. Commercial Applications and Other Benefits: Appraisers, Lenders, Insurance Companies, Realtors, Green Raters, Credit Rating Agencies, Third Party Owners and most importantly Homeowners can all benefit from a data collection effort that results in a transparent value for the solar asset that can be reliably and efficiently developed throughout the transaction process.