Structured Data for Asset Backed Securities

Posted on January 20, 2017 by admin

Last year in the United States alone, more than 10GW of capacity in solar energy was added to the grid. This represented 40% of all new energy infrastructure in that country. The US solar industry, led by the Department of Energy is working towards a subsidy-free 6c per KwH goal for 2020, and expects to do even better than that before long.

Installing solar capacity efficiently represents an extremely complex balancing act. It requires huge amounts of data. Some of it is geographic – how much sunlight will fall, on average, on this particular piece of land? Some of it is to do with local distribution costs. Some of it is to do with infrastructure. Some of it is to do with local taxes and local incentives. Some of it involves ongoing data about the performance of a facility. The very act of pulling all that information together in order to determine whether a specific project should get financed and from where is expensive and time consuming. This kind of financing is quickly passed on – securitised – into an asset backed security that owns the future cash flows associated with specific projects, so confidence in the data is important. Asset Back Securities are an essential part of modern infrastructure development, but involve costly and specialised analysis.

The analysis can be greatly simplified if the fundamental data associated with the financial decision can be standardised. The “Orange Button” project run by the US Department of Energy, with the assistance of a range of experts, including XBRL US, is working to construct an XBRL-based taxonomy for reporting to simplify and automate these data flows. At a webinar this week, the issues were discussed with a large audience.

Our take? This is a very interesting project. The ability of XBRL to standardise data requirements, manage data quality and facilitate ongoing automated reporting is useful for a wide range of decision making. Not just Solar, but a plethora of other kinds of financing decisions. Policy makers, ABS specialists and industry experts should follow the DoE’s progress carefully. Find out more and watch the replay on the XBRL US website.

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