In Interview: Irish photo voltaic project developer BNRG Renewables will bundle solar assets in its UK pipeline of up to 120MW to attract institutional funding, and retain some assets on balance sheet, co-founder David Maguire and Director Nick Holman told Clean Energy Pipeline.
BNRG’s UK project pipeline stands at between 80MW and 120MW of solar projects that could potentially be built over the next 18 months to two years.
“We need to take a portfolio approach where we have a bundle of projects and then go to the funders,” Holman said on the side lines of a recent conference in London.
Aside from divesting assets to yield investors, BNRG aims to raise debt to finance a share of the portfolio that it plans to retain and subsequently refinance on balance sheet.
“We have an appetite to hold onto a lot of projects,” said Maguire. “We will be holding quite a chunk ourselves on balance sheet, and we will bring in a debt provider for those projects. We may refinance those projects on balance sheet two years later.”
Unlevered construction equity and refinancing are growing alternatives to competitive, expensive and scarcely available traditional project finance, Maguire explained.
“We have effectively seen the disappearance of traditional project finance, which is how we would traditionally finance projects and have done in the past,” he said. “We’re seeing 100% construction equity and unlevered going forward, and then refinancing, because the banks can’t keep pace with the activity.
“At the same time, we’re starting to see a slight shift in that more banks are entering the market actively now and funding projects. The banks are starting to open for business again.”
The appetite for operational solar assets among funds and other yield investors that are comfortable with the technology still remains strong, according to Maguire.
“The level of interest in acquiring operational assets is huge; there’s far more funds chasing the number than there are number of good quality projects,” he said. “From that perspective, funding is not the challenge it used to be. We tend to deal with yield investors or institutional investors who have experience of the Renewables Obligation Certificate regime and are comfortable with solar.”
The rates secured for large-scale renewable energy projects under the UK ROC regime until its scheduled expiry in 2017, when it will be replaced by feed-in tariffs with contracts for difference, provide visibility for projects, according to Holman. Ground-mounted solar PV projects are guaranteed 1.4 ROCs per megawatt-hour for 2014 to 2015.
“We have moved away from a cliff edge from where we needed to have everything developed by March 31st or the project doesn’t become viable to a pipeline where we’ll have regular connections every quarter,” Holman said.
“So we can go to a funder and say we have 40MW here, of which 30MW is confirmed and 10MW is highly probable, but we may not be able to show them what we’ve got going on in the fourth quarter.”
BNRG may also finance some smaller UK projects through crowd funding after the BNRG Hoo Solar plc project became the first installation to be funded by crowd funding platform Abundance Generation.
“We’re exploring ramping that up to larger scale projects” said Maguire.
Holman added: “The end investor gets a good return. It’s distributed risk. We get attractive funding relatively quickly. As a retail investor you are getting 6% return for very low risk.”
Investors interested in BNRG’s solar projects should contact David Maguire, co-founder and Director, at firstname.lastname@example.org.
David Maguire and Nick Holman was in interview with reporter, Jessica Mills-Davies of Clear Energy Pipeline
Published on Clear Energy Pipeline website 10th of October 2013
The reporter, Jessica Mills-Davies, can be reached at email@example.com