TechPulse 360

The economic collapse of 2008 turned the credit market for large-scale solar farms into a financial desert.

Capital was simply not availability through much of the year. The constraint eased modestly in recent months. Now there are suggestions money may begin to flow again next year

Solar projects are bankable because investors are seeking safer returns, says Martin Roscheisen of Nanosolar

Industry executives say market conditions remain difficult. “Lenders are holding onto their money much more tightly,” says Dan Judge, general counsel of solar thermal company BrightSource Energy. “The market is not what it was in 2005 and 2006.”

But there are signs that investors and banks have shifted their focus from risky financial derivatives and complex Wall Street instruments to the relative safety of long-term energy projects. There also are suggestions new banks from Europe and Asia may begin lending for solar construction, expanding a small field of only eight to 12 banks working on projects today.

Next year should see significant growth in solar projects between 10 and 50 MW in size, says Ban Jacoby, managing director of energy investment consultants CP Energy.

The rise in competition for deals also may lower expected investment returns, which by some estimates have reached a percentage in the mid teens, compared with a more traditional single-digit rate.

Already an easing of credit hurdles is aiding wind power developers, where less risky deals are getting done.

At present “there are (solar) deals getting done, but there is not a lot of liquidity in the market,” reports Tom Glascock, a partner at the San Francisco law firm of Orrick Herrington & Sutcliffe.

Yet despite the difficult environment, thin-film solar projects are “bankable,” says Martin Roscheisen, CEO of Nanosolar. Capital is seeking safe returns and solar projects fit the bill because they are backed by electric rate payers, he said.