Convertible debt is back in style in solar, and SunPower (NASDAQ:SPWR), SunEdison (NASDAQOTH:SUNEQ), and Trina Solar (NYSE:TSL) are all using this debt to expand their balance sheets. The goal is to use the additional funds to acquire or build solar projects, which will eventually be sold or pushed down to YieldCos. 

But the cost for investors is dilution if stock prices continue to rise. That lowers upside for existing investors, who would then own a smaller percentage of the company. 

The alternative would be to sell debt that pays a higher interest rate but doesn't convert to stock. They've chosen not to do this because of the risk it adds to operations because of quarterly interest payments. 

The question solar specialist Travis Hoium is asking is if project returns are as high as advertised, why not use non-convertible debt? Find out more in the video below. 

Travis Hoium manages an account that owns shares of SunPower and is personally long both shares and options. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.