Solar power is a very safe investment, but it has taken banks and financiers a bit of time to get used to the technology. However, there are a lot of promising movements in this arena. One of the most recent is news that Goldman Sachs is offering financing for solar PV projects in Japan for a lower rate than banks.
“The U.S. lender is structuring the notes for an affiliate and other renewable energy companies including Japan Asia Group Ltd. (3751), a solar-project developer that owns a combined 33 megawatts of capacity at home and in Europe,” Bloomberg writes. “JAG has sold about 6 billion yen ($56 million) of bonds that pay for facilities including two plants on the southern island of Kyushu. Notes backed by three projects carry an A grade from Rating & Investment Information Inc., the company said July 16.”
Bloomberg also notes that the global average on renewable energy bonds is 6.4%, much higher than JAG is able to sell at a much lower rate. “Japan Asia Group can sell notes with interest at the ‘1 percent level,’ while non-recourse loans carry a rate of 2 percent to 3 percent.” For more on this topic and the broader solar investment environment in Japan, check out the Bloomberg article linked above.
One big reason companies like Goldman Sachs feel comfortable getting into solar project financing is that the returns are very stable and secure. Furthermore, low solar panel prices have enabled a much bigger solar power market, which makes a move into this realm more profitable and logical. The International Energy Agency has actually come out and said that solar and wind power can be cost-competitive in any country. The energy minister of the Philippines recently noted that rooftop solar was cheaper than coal in the Philippines.
In the US, various solar loans have started popping up as new financing options for rooftop solar power. For a few stories on that, see:
There are a lot of positive signs regarding solar power’s future, but the degree to which banks and financiers like Goldman Sachs are getting into the solar loan business is one of the most encouraging.