What Are The Key Performance Considerations For Bankability Of Assets?

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It is important to investigate the performance of solar power plants. Knowledge about the performance of solar power plants will result in correct investment decisions, a better regulatory framework and favorable government policies. It is essential therefore to list the various factors that contribute to plant output variation. The performance of the power plant however depends on several parameters including the site location, solar insolation levels, climatic conditions especially temperature, technical losses in cabling, module mismatch , soiling losses, transformer losses and the inverter losses. There could also be losses due to grid unavailability and the module degradation through aging.

Let see what our experts think :

As governments set new post-COVID decarbonization targets across the globe, one may argue that access to capital will become, if it is not already, a limiting factor for deployment of renewable energy assets. As global leader in PV module quality assurance, STS therefore receives regular enquiries about best practices to ensure “bankability” of PV assets.

Bankability is ensured through the evaluation and mitigation of all risks potentially faced by the project. Since PV modules are typically the largest part of the hardware investment, evaluation and mitigation of modules technological risk is often necessary to get the project financed. This need for bankability is exacerbated by the emergence of a new generation of modules (larger, more powerful, based on M10 or G12 wafers) expected to spread aggressively in the market in the next two years. A complete list of manufacturing risks associated with this new generation of large modules is available at: https://www.sts-certified.com/publications.

To systematically mitigate these risks, STS recommends considering the Product (here the PV module) as the combination of Design, Materials and Processes:

Frédéric Dross, PhD, VP-Strategic Development STS

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The reality is that the bankability of an asset, in the renewable energy space, can mean various things depending upon who you are and what is your stake in the asset/project. To financial institutions and banks, a project is considered bankable when it is able to generate sufficient cash flow to meet its obligations; to others, an asset is considered bankable when it is able to generate optimal returns. It speaks to the level of confidence, investors and financiers have in the asset.

Solar power has great appeal for investors and financiers looking at opportunities in the sector. A solar power project’s scalability and flexibility gives it distinct advantages over other forms of power generation which are constrained by source of power, availability of raw material to generate power and the geography. However, solar power developers, investors and financiers still need to mitigate certain risks which will determine an asset’s performance.

Solar power is essential to meet the global power demand and it is important to ensure that such projects are nurtured with the participation of key and reliable players. Ensuring bankability of a solar asset needs careful preparation. Developers need to look at a broad spectrum of areas such as finance, environment, consumers, regulators, suppliers etc. to commission a successful project. Developers need to ensure that capital is deployed efficiently and risks, associated with the project, are identified and a mitigation mechanism is put in place to assure the financiers.

While solar power plants in utility scale are maintained by the workforce to ensure reliability and bankability. Solar rooftops usually are left unattended and un-serviced. This is where ATUM, being a highly durable and reliable product, brings in bankability in solar rooftops.

Vamsi Gaddam, Joint Managing Director, Visaka Industries Limited

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India has set an ambitious solar target of 100 GW of installed capacity by 2022 of which only about 37% has been achieved so far. One of the key aspects to accelerate this solar adoption process is to make solar an attractive investment tool for investors and lenders. In the current context there is a lot to be done to make solar a bankable asset – that is an asset which makes commercial sense for investors / lenders.

With continued focus on improving these key factors related to solar projects, the solar assets could be made an attractive investment tool. This would pull in the much-needed investments in this sector to beef up growth and achieve our national solar target.

Manjesh Nayak, Director / CFO, Oorjan Cleantech Pvt Ltd

To read in detail, download the SolarQuarter India Magazine, January 2021 Issue : https://solarquarter.com/2021/02/11/solarquarter-january-2021-issue/

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