Green power is the hottest concept around these days. Gas is getting more expensive, it’s getting harder to find and dig out the oil, and green technology is growing by leaps and bounds. Not only that but it is free to harvest and can be harvested almost anywhere worldwide. So to begin this new series on financing green energy projects, we’ll start with solar power.
Solar power or solar energy as an investment vehicle is not a new phenomenon to investors. Solar energy has always had mass appeal with the public and as such has manifested into widespread popularity of investment into the global solar energy market. The technology is such that you can have your own solar roof on your house or you can develop a solar farm to generate power for an entire town or region. And the best part: it can be sold back to the grid.
In the mid 1980s to early 1990s, US$ 1.2 billion was raised in debt and equity to develop nine solar power plants in California. By the mid 1990s, 51 solar power plants were being developed worldwide. And today, with the continued development of countries like China and India, new solar power plants projects are coming on board on a regular basis.
With that said, prognostications and predictions by industry experts for solar power energy continue to be relatively strong with some anticipated “hiccups” as the technology and focus of renewable energy continually shifts. Not only that, but solar power is widely considered as an inconsistent form of renewable energy given the amount of daylight hours, but it is certainly one of those most open and receptible to new technological advancements and thus new project developments.
Under the best of circumstances, someone who wants to develop a solar power project will have an off-take agreement. What’s an off-take agreement, you ask? It’s an agreement where a third party (government/ private power company) will guarantee by signature that they will buy your output for a certain amount of time in the future.
Why is that such a good thing? Because for the investor(s) it’s a guarantee of return on their investment. It’s also a guaranteed steady payment on your loan debt because the energy the solar farm produces is sold over the long term. Guaranteed income is a nice magic word that investors like to hear.
The rest isn’t that hard. You’ve got to get your documents (i.e. Business Plan, Feasibility Study) and figure out your solar technology manufacturer and where you’re going to put it all.
But as always…
Always make sure that you make an informed decision in all cases,
All the Best,
One thought on “Solar Power Project Finance – How To Prepare For It & How To Get It”
Always a pleasure to read an informed input. Don’t forget to write about Biomass. Regards