Advanced SolTech Sweden AB (ASAB), a developer and provider of integrated solar energy solutions, is working to reduce carbon emissions in China by issuing green bonds to finance solar energy projects.
“Our investments make a true impact,” said Max Metelius, chief financial officer and chief operating officer at Advanced SolTech Sweden AB. “Investments in the renewable energy sector in China offset an energy mix with 10-times the emissions of CO2, compared to Sweden.”
ASAB was founded in 2016 as a subsidiary of SolTech Energy Sweden AB after it saw the opportunity to start working with solutions for green financing. That year, ASAB began preparing the company for green bonds issuance.
A year later, the company received the highest grade, Dark Green, for its Green Bond Framework from Norwegian company Cicero and its partners, SEI and ENSO.
ASAB has four listed bonds at Nasdaq Stockholm, after having issued a total of about 517.5 million SEK in bonds. The green bonds thus far have strictly been used to finance rooftop solar facilities, renewable sources of electricity that don’t utilize the scarce resource of the land.
Proceeds from ASAB’s green bonds, in the form of intra-group loans, go toward Advanced SolTech Renewable Energy Hangzhou Co. Ltd (ASRE), which is the owner and operator of solar power stations on customers’ rooftops in China.
In particular, two bonds – Solt2 and Solt3 (together about 276 million SEK) – have funded 36 projects. Projects financed by the SOLT2 bond avoided 45,673 tons of CO2 emissions a year, while projects funded by the SOLT3 bond avoided 22,500 tons of CO2 emissions annually.
The company also has plans for a listing on Nasdaq’s First North Growth Market in the first half of 2020.
SolTech has exposure to the Chinese energy market through its majority stake in Advanced SolTech Renewable Energy Co. Ltd. (ASRE), which offers solar energy as a service for customers in China. This means that ASRE builds, owns and manages solar energy facilities from which customers buy all produced energy under 20-to-25-year contracts.
China, one of the world’s most populated countries, has been the world’s largest energy consumer since 2009. But in 2015, China also became the world’s largest solar energy market, which led to a rapid increase in business and installations for ASRE.
When ASRE built its first two plants in 2014, they had a total capacity of 445 kilowatts (kW); today, the company has 139,2 MW of capacity installed. For example, JiangSu YangHe Brewery Co. Ltd. uses roughly 40 million kWh of electricity per year, almost all generated by coal. But with a solar installation, the brewery could use 10 million kWh from solar, which would result in approximately 10,000 fewer tons of CO2 emissions.
To date, the firm has invested more than 1000 million SEK to create approximately 139 MW of installed solar energy capacity in China. With a set installation goal of 1000 MW of solar energy capacity by 2023 ASRE anticipates that further investments of nearly 5 billion SEK will be needed – all of which is expected to be financed through a mix of equity, loans and green bonds.
The Swedish company has been at the forefront of developing a green bond structure for the Swedish retail market. In March of 2018, Nasdaq Stockholm opened an exclusive market for green retail bonds – Nasdaq First North Sustainable Retail Bond Market.
ASAB’s green bonds are the only corporate bonds in the Nordic market with denominations that allow for direct retail participation.
“We thought that these kinds of investments would be interesting to retail investors, which turned out to be right,” said Metelius. “Many of the investors are more like fans; we are very happy to have such dedicated investors.”
Source Nasdaq