Solar ‘lowest risk technology’ for investment

Solar is currently considered one of the “lowest risk technologies” for banks and other financiers to invest in and can often gain access to some of the lowest priced debt, a panel at today’s Large-Scale Solar UK conference has said.

Speaking at the conference in Bristol this morning, Sue Milton of international bank RBS said that while investors had generally been “weary of power” in the past solar, particularly post-construction, represented an interesting proposition for long-term debt.

HSH Nordbank’s Daniel Egli agreed, stating that a number of new investors had emerged in the market resulting in what is now a “more aggressive” landscape for financiers looking to invest in solar portfolios.

Chairing the panel, BNRG’s David Maguire said that rather than construction, connection risk was considered the biggest fear amongst financiers and deadlines such as this month’s ROC cliff edge were cause for concern.

Projects above 5MW had to connected to the National Grid prior to 1 April, with all projects failing to meet the deadline losing their eligibility for 1.4 ROC funding.

Egli considered that one area that solar developers could investigate was the cost of sourcing investment or debt, and that a standardised approach for the industry could bring such costs down.

But while the panel agreed that utility-scale projects in the UK represented interesting propositions for banks, legal difficulties surrounding the country’s rooftop market have been “challenging” and that the nascent split-connection commercial and community sector would require “clever financing” if it is to take off.

Last week’s news of a steep degression rate for such schemes has already poured water over the scheme, with Community Energy England chairman Philip Wolfe considering that the degression was “slamming the door shut” on the scheme before it has had the opportunity to start.