There are a couple of reasons for this:
1) FIT programs guarantee a fixed income for the project -- making cash flow projections very reliable.
2) There are widely accepted tools - such as PV Kalk (German) that provide the information the banks need to make their decisions ... that coupled with a list of "bankable" solar technologies - really speeds up the decision process.
3) There is a strong "repurchase" market - by investment groups wanting to buy up connected solar projects because of the attractive return on investment and performance guarantees. Getting a commitment from such an end buyer makes raising construction financing easier.
As a result European banks can usually provide decisions in a 30 days or less and financing of 80% and even 90% of the total investment cost with long terms (15 to 18 years) and attractive interest rates (2 to 3 points over LIBOR or Eurobond rates is typical).
Contrast that with these recent comments from an American solar project developer
The financial meltdown is still impeding the flow of renewable energy project money, a pioneer of solar financing said during a Feb. 3 AltaTerra webinar. Still, says Matt Cheney, CEO of CleanPath Ventures, banks that do lend are in for longer hauls.
More than ever, “patience and passion is needed...to prevail even after hearing “no” a thousand times,” says Cheney, who has financed, owned, and operated over $300 million in solar energy assets.
Banks might take a year to complete due diligence. Always looking for a risk-free return on their debt financing, banks are scrutinizing the whole fabrication process now. They often find the weak link in proprietary technology whose black boxes make them nervous. Failures of new tech components in projects in the past have made bankers more cautious; so they are looking for manufacturers that will still be around to replace or upgrade the failing parts years down the road.
The good news, Cheney says, is that such replacements can often be done with cheaper and better products.
Cheney suggests some strategies to improve the odds that your project will get financing. They include:
The financial meltdown is still impeding the flow of renewable energy project money, a pioneer of solar financing said during a Feb. 3 AltaTerra webinar. Still, says Matt Cheney, CEO of CleanPath Ventures, banks that do lend are in for longer hauls.
More than ever, “patience and passion is needed...to prevail even after hearing “no” a thousand times,” says Cheney, who has financed, owned, and operated over $300 million in solar energy assets.
Banks might take a year to complete due diligence. Always looking for a risk-free return on their debt financing, banks are scrutinizing the whole fabrication process now. They often find the weak link in proprietary technology whose black boxes make them nervous. Failures of new tech components in projects in the past have made bankers more cautious; so they are looking for manufacturers that will still be around to replace or upgrade the failing parts years down the road.
The good news, Cheney says, is that such replacements can often be done with cheaper and better products.
Cheney suggests some strategies to improve the odds that your project will get financing. They include:
Making proprietary technology only a small part of a project that includes mainly products and processes that have a “pedigree.”
Working off the balance sheet of an established partner, or looking at balance sheet support with new (but expensive) insurance products now out.
Planning for bankability early in the R&D and demonstration process by collecting data and having it vetted by recognized third-party engineers.
Tackle quality control before it becomes a bigger problem.
Getting to the right price point, beyond R&D pricing, and bringing in the right management team to get you there.
Look at niche marketing opportunities that don’t require bankability, such as rooftop solar or large unique customers with special needs, such as a winery.
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