Debt financing for non-utility scale renewable energy projects is hard to find in Canada, even in Ontario where we enjoy a feed-in tariff. Banks are generally interested in playing a role in the renewable energy market; they tend to believe that it is here to stay. However, the Canadian market lacks a track record and local banks do not possess the knowledge and experience. Considering the recent economic downturn, banks are also not hungry enough to gain the necessary understanding. They could gain comfort by learning about projects that were done in Europe or the USA. But there are lower hanging fruits available to them.
Due to the feed-in tariff in Ontario, there is a lot of activity and many new entrants, especially in the area of rooftop solar. At this point, it is hard for the banks to assess who of the players is going to be successful. Another reason why banks are entering the renewable energy market carefully. However, banks will do very conservative transactions, with terms and conditions being much tighter than what they are in traditional transactions.
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