Solar Banking, Part 2: Five Key Considerations in Large-Scale Solar Financing

Bank money remains available for utility scale solar photovoltaic (PV) and concentrating solar power (CSP) projects, bank officers from CITI and Deutsche Bank agree, but not all the banks that participated in project financing in 2011 will return.

“I am somewhat afraid of what happens to these banks as we move into 2012,” said Deutsche Bank Director Vinod Mukani at the Smithers APEX San Diego solar event.

“Europe had a leg up because renewables had a head start there,” the German-based bank’s renewables authority said. “Investors were familiar with this asset class. Now, as they delve into the challenges that Basel III poses, they will have to curtail their activities. That is quite apparent if you look at Q4 of last year.”

Deutsche Bank (DB), Mukani said, “underwrote about a billion dollars’ worth of wind and solar assets in Q4, but the bank group that we started with was not the bank group that we ended with.”

And macroeconomic trends, he explained, such as “southern Europe in crisis, a slowdown of the economy in China, and Basel III regulation” will force banks to face “a very daunting task of deleveraging and meeting the requirements of capital ratios,” Mukani said.

But “large-scale solar assets continue to attract more and more capital,” he added, because of “attractive risk and reward profiles.” All in all, “it’s a good environment,” Mukani said. “There is a tremendous amount of capital that still is available. The question is, how do you get it?”

via Solar Banking, Part 2: Five Key Considerations in Large-Scale Solar Financing : Greentech Media.

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