In a sign of the difficulty financing solar, commercial installer Borrego Solar said on Monday it has taken in $30 million from an outside investor to fund new projects.
With the additional funding, Borrego Solar will now be able to offer purchase power agreements to companies and government organizations.
In that model, a school or business does not buy the actual solar equipment but instead purchases the power it generates at a fixed rate over 20 or 25 years. The panels themselves are owned and maintained by a third party, such as an installer or a financing company.
Taiwanese metal cable manufacturer Walsin Lihwa took an equity stake in Borrego Solar and will be financing purchase power agreements.
Changes to solar power subsidies, where a project developer can apply for cash from the Department of Energy rather than take a tax credit, makes it easier for non-U.S. companies to fund solar, said CEO Mike Hall. He said the model of offering financing and installation from a single company simplifies the arrangement for the customer.
But the money available for project finance has dried up substantially over the past year, a situation that has delayed projects, say industry executives.
"The gating factor for solar 12 months ago was the shortage of solar modules (panels). Now it's really a question of access to capital," said Hall, who added that it was very difficult to secure the financing with Walsin Lihwa.
Hall said demand for solar among commercial and government customers is strong but installers will need to add financing to grow in the coming year.
"Everybody that wants to be successful over the next 18 months needs an alternative strategy for access to capital."
The return for renewable-energy projects is generally considered predictable and low risk. But most of the banks that provided tax equity funds for renewable energy have exited the market in the past year.