‘Solar for coal’ swaps: A financial innovation that could accelerate the carbon transition


An innovative new financial approach is accelerating the electric sector’s financial transition from coal to clean. “Solar for coal swaps” could help refinance the 26 GW of existing coal plants that will be uneconomic compared to local renewables in the near term, using private capital to fund community-level investment for publicly-owned cooperative retail utilities, while supporting local economic development. To learn more, read Solar For Coal’ Swaps: A Financial Innovation That Could Accelerate The Carbon Transition.

Key Takeaways:

  • Solar for coal swaps involve third parties – an energy marketer, a renewables developer, and related investors – purchasing and retiring coal assets from a regulated utility in conjunction with a contract for new solar.
    • Transaction terms include payment for solar power plant output, repayment for purchasing and decommissioning coal plants, and may include financing for community transition
  • Publicly-owned and municipal utility governing boards can consider solar for coal swaps to accelerate transition away from uneconomic coal with the following considerations:
    • Consumer savings or rate stability can be achieved along with transition to cleaner resources that satisfies consumer demand
    • Local economic development options can be created through solar for coal transactions
    • Pressure created on recalcitrant utilities by these new options can result in striking changes in their strategy and outlook
    • Private sector financial, technology, and market capabilities can be brought to bear on behalf of utilities who might not have these levels of expertise on staff

Path to 100% Perspective:

As fossil and renewable cost differentials widen, more clean-energy swaps could make sense in more places. The examples from this article demonstrate the future of the renewable energy sector is brighter and more innovative than ever before.