First U.S. Residential Solar Projects Turn to Output Insurance

(Bloomberg) -- A tool designed as an insurance policy for solar-power generation will be used to manage the risk associated with U.S. residential systems for the first time as part of a financing agreement backing 4,000 projects in the Northeast.

Investment in the 35 megawatts of capacity being developed by IGS Energy’s solar unit will be partly protected by KWh Analytics’ “solar-revenue put,” according to the statement Thursday by the San Francisco-based risk-management software company. Solar farms have previously obtained the put, which can guarantee as much as 95 percent of expected output. It can be used to help solar investors reduce their cost of capital, leading to better financing terms.

IGS is both developing and managing the portfolio, which is being backed by funds managed by Ares Management LP. Swiss Re AG is backing the insurance product. Terms weren’t disclosed.

This “demonstrates that this product works for utility-scale as well as residential,” Richard Matsui, KWh’s chief executive officer, said in an interview. KWh has structured the put on more than $250 million of solar assets, according to a separate statement Thursday.

©2018 Bloomberg L.P.