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Solar rearray
09 April 2009
The solar project market is changing – impacted by less debt availability, lower feed-in tariffs and new technology. John Dunlop, head of the London Energy Team at HSH Nordbank, explains the evolving bank and sponsor priorities in new solar project financials.
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[solar power]
[project finance]
Big changes are causing a rethink of the financials for solar projects. Debt finance has become difficult to find. Solar feed-in tariffs are stepping down to a materially new low level in the market-leading countries. However, module prices measured on a cost per MW basis are expected to drop significantly and new technologies are becoming commercially available that are superior to existing technologies in certain applications.
These new market conditions are in stark contrast to the frenzied build-out of solar projects over the past couple of years. In Spain, for example, there was a race to get projects built under the REPE Definitivo before 29 September 2008 to qualify for the high feed-in tariff. Speed of execution mattered most. Optimising project economics mattered less. Project finance was plentiful and long as project developers could procure photovoltaic modules, which became increasingly difficult, the projects were almost always profitable.
In the new...
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