What Happens if Energy Savings From Solar Doesn’t Materialize?
Energy efficiency and solar companies often finance projects with power purchase agreements that guarantee a certain amount of energy savings for the end user. But banks are often skittish about lending for solar projects, according to Renewable Energy World. Banks are concerned that the solar company will have enough cash flow to fulfill the guarantee and repay the loan.
Energi, a Massachusetts reinsurance company, has come up with a financing model to help lenders feel more comfortable financing solar projects.
“We’ve developed a program that allows the contractor to put in place a guarantee and then back that up further with an insurance policy,” said Kevin Kaminski, senior VP of alternative energy with Energi.
Typically, the collateral for the loan is the solar equipment. But does this equipment have any real value for the bank if it’s not connected to the borrower’s property?
Some states have even begun requiring collateral backing – some kind of insurance, or cash, or letter of credit, said Kaminski.
Energi’s insurance adds between 2 and 5 percent to the cost of the project in the form of a one-time premium. The insurance is non-cancellable even in the event of the bankruptcy of the borrower.
These insured projects can help smaller solar companies approach their banks with a low-risk proposition.
Why bring buildings online? What information can operations teams glean from real-time data that they can’t just get from the monthly data provided by utility companies? Click to learn more.
- Existing Building Technologies Combine for Increased Savings
- The Future of Operational Risk Management: The Oil & Gas and Chemicals Approach
- Combined Heat and Power
- 2014 Environmental Leader Product and Project Awards
- Improve Your Company's Environment and Energy Performance
- Unlocking the Value of Energy & Operational Data
- Energy Financing Report
- Let's Do The Math for DR
- Best Practices in Electricity Procurement
- How "Fixed" is the Fixed Price Product?
- Cut Costs and Improve Facility Operations with Energy Data
- Energy Procurement Strategies for Winter 2014 and 2015
- Energy Efficiency Requires Engineering Efficiency
- Integrated Building Optimization: A Crucial Convergence of Demand-side and Supply-Side Energy Management Strategies
- Driving Productivity and Profit with Industrial Energy Management