Hawaii Paves the Way with First Green Energy ABS

Hawaii has become the first state in the union to tap the securitization market with a US$150m green energy bond, a rare capital markets transaction designed to meet a social purpose.

The two-tranche financing is part of an expansive plan by Hawaii to have 70% of its energy derived from clean or renewable sources by 2030.

To get to these goals, a securitization platform was set up to provide funding to bridge the “divide between those who directly benefit from clean energy technologies and those who cannot,” stated a copy of the 2014 legislative order permitting the bond sale and loan program.

“When we did a deeper dive, we found there were haves and have-nots,” said Tan Yan Chen, project manager of Hawaii’s Green Energy Market Securitization (GEMS) program, a part of the State Department of Business, Economic Development and Tourism, which issued the bonds.

“More wealthy folks do better getting those (solar panel) systems in place,” Chen said. “Our target market is (residents), who don’t have up-front cash or can’t get access to financing.”

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