Industry Analysis
Feb 20, 2024

The Longer the Term, the Further Out of the Money?

Solar offers grew less competitive at longer terms, according to our marketplace data from 2023.

Originators posted 501 solar offers on RenewaFi last year. The longer they were, the more out of the money they became.

Moneyness indicates how attractive a given price is to a potential counterparty. For offers, that means subtracting the offer’s price from an estimate of its market value (which we call "SWRV"), which is shown as a percentage.

The chart below shows that moneyness declined at longer term lengths.

While the median solar offer with a 5-year term was about 4% in the money, the median solar offer with a 15-year term was more than 6% out of the money.

Throughout 2023, the market grew increasingly skeptical of longer-term contracts. This trend helps explain why.

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