Global operating capacity of CSP/STE projects was increased by 420 MW to reach nearly 4.8 GW at the end of 2015. Excitingly, a wave of new concentrated solar power projects was under construction as of early 2016, and several new plants are expected to enter operation in 2017.
The year of 2016 is regarded as a turning point in market expansion in emerging CSP markets like Morocco, South Africa, China, Australia, Chile, India, Israel, Mexico and Saudi Arabia. The blossom of global CSP market surely attracts the eye of investors and financiers, and the topics of financing CSP projects and equipment across the value chain are under hot discussion. Power economic growth and quality improvement of citizens’ life have been a clear need especially for developing countries, renewable energies like solar thermal pose great opportunities for private investors if the capital can be raised and risks overcome.
Undoubtedly there exist challenges and obstacles in financing CSP, take China market as example, limited experience can’t be denied by local companies not only in project development and operation but key components manufacturing, and others like insufficient DNI measurements, unconfirmed FiT and possible payment delays etc., the banks expect higher levels of equity and standby reserve accounts to help cover risk of cost overruns until CSP in China is proven at scale
As Mr. Dana Younger from IFC reported during CSP Focus China conference earlier this March, the key elements for successful CSP financing are as below:
- Committed and experienced investor/operator/developer, ensuring sufficient equity at risk and transparent procurement;
- Clear regulatory / contractual framework providing for adequate mechanism of tariff adjustment and/or strong LT PPA from creditworthy utility/client;
- Competitiveness of power generation (merit order), which is key for merchant projects and critical when PPA, to avoid risk of eventual PPA renegotiation/distribution losses;
- Confirmation of solar resource (DNI);
- Construction risk mitigated;
- Upfront risks assessment by reputable independent parties (feasibility study/least cost option study, E&S)