'Rising Extreme Weather and ESG Investment Demand' Boost Popularity of US Solar Bonds

Sales Volume of $1.94 Billion in the First Half of This Year... Doubled Compared to Last Year

[Photo by Reuters Yonhap News]

[Asia Economy Reporter Park Byung-hee] This year, the so-called "solar bonds" investment craze is heating up in the United States, according to a report by The Wall Street Journal (WSJ) on the 4th (local time). Solar bonds are bonds issued to raise funds necessary for installing solar panels on the roofs of American homes. This year, with abnormal weather events occurring one after another in the U.S. and increasing demand for eco-friendly investments, solar bonds are gaining popularity.

According to market research firm Finsight.com, the sales volume of solar bonds in the first half of this year reached a record high of $1.94 billion. This is about double the sales compared to $1.15 billion in the first half of 2019 and $1.04 billion in the first half of last year.

Demand for solar panels is increasing among homeowners because they can save on electricity bills while reducing carbon emissions and contributing to the environment. Asset management companies also recognize solar bonds as investment products that respond to shareholders' demands to increase Environmental, Social, and Governance (ESG) investments. Solar bonds are attracting attention as investment products that connect these asset managers and homeowners.

Tangi Serra, CEO of Goodleaf, a solar bond issuer, said, "This year, abnormal weather events have occurred one after another, increasing demand for solar bonds," adding, "California wildfires, Texas cold waves, and Louisiana blackouts have all greatly promoted solar bond products."

Just last week, Hurricane Ida struck the southeastern United States, cutting off electricity supply to 1 million households in Louisiana and Mississippi, and 200,000 households in New York, New Jersey, and Pennsylvania.

As demand increases, solar bond interest rates are also declining. According to Finsight.com, the interest rate on solar bonds recently issued by Goodleaf was 1.94%. Compared to 2.77% in July last year, it has dropped by about 0.8 percentage points in just over a year.

Increased government support is also contributing to the growth of the solar bond market. The 26% federal investment tax credit benefit for residential solar panels is scheduled to disappear in 2024. In response, the Joe Biden administration and the Democratic Party are currently pushing to extend the existing tax credit benefits for up to eight more years.

This content was produced with the assistance of AI translation services.