Solar debt financing on pace to reach highest since 2010

Global debt financing to solar companies is on pace this year to reach the highest level since 2010, with almost half going to developers and installers, according to Mercom Capital Group LLC.

Solar companies borrowed about $18.4 billion through the third quarter, almost triple the $6.2 billion last year and $6.8 billion in 2012, Raj Prabhu, chief executive officer of Austin, Texas-based Mercom, said in an interview today.

About 43 per cent went to companies building power plants, both large-scale solar farms and smaller, rooftop systems. A few years ago, manufacturers received almost all the debt financing, Prabhu said. Lenders grew nervous as new solar technologies didn’t pan out and began scaling back debt offerings.

“Banks and financial institutions are comfortable again, in terms of lending,” he said. “All of this is helping the momentum of the solar industry right now.”

Debt financing for solar was $36 billion in 2010 and $20 billion in 2011, driven in part by loans and credit lines extended by the Chinese government to local manufacturers. In 2010, 92 per cent, almost $33 billion, of global debt offerings for solar was in China. That financing boom helped trigger a worldwide glut of panels that depressed prices and led to a trade dispute with the US.

As much as 52 gigawatts of solar installations are expected this year, and 61 gigawatts in 2015, compared with 40 gigawatts last year, according to Bloomberg New Energy Finance. Demand in China is expected to account for about a quarter of the total.

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