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Different financing platforms have started to pop up since the end of 2014, such as online financial & leasing services set up by individual companies, government financial services, green financial products, and YieldCo which has been a very popular topic recently. All of the financing mechanisms are expected to stimulate the momentum for power plant development.
Online financing platform has been a hot topic in China these years. For example, SPI introduced a solar financial leasing product called “Solarbao.com” and a B2B e-commerce platform called “Solartao.com” this year; Jinko Solar launched an online loan service with Shanghai, Haining Zhejiang, and Jiangxi; CGN also came up with “PVbao.net” this year to provide solar financial products with return rate of 13%. “PVbao.net” is actually the first internet banking platform established by the Central Bank of China, leading to consumer boom. In addition, YieldCo is another choice as well, and thus there are all kinds of ways to finance PV plants.
Speaking of YieldCo, it is a dividend growth-oriented public company, created by a parent company, that bundles conventional long-term contracted operating assets in order to generate predictable cash flows. This investment can be attractive to shareholders because they can expect low-risk returns (or yields) that are projected to increase over time.
PV Solar Project Development and Financial Needs
After EPC/developers acquire the land and PPA, they will move on to construction and procurement phases. During this time, short-term financing is required. Upon the completion of the power plants, the owners can request for long-term financing from banks, while pay back previously borrowed short-term loan. If the power plant is successfully connected to the grid at the end, it won’t have to deal with any financing shortage issues.
However, all of the following are risks – Will the power plant construction and grid-connection go smoothly? Will power supply be stable after connecting to the grid? Will the amount of power generation meet the expectation? Will subsidy be on schedule? If one of the processes is postponed, the owners may not get long-term financing from banks, leading to financial shortages. This is also the greatest challenge for downstream construction. But with a variety of financing mechanisms coming out, it will stimulate the growth of power plants and reduce the financing issues for system manufacturers.
Lately, Canadian Solar announced to put low-risk projects from the US, UK, Canada, and Japan in the YieldCo. The company anticipates the IPO may be available on a US Stock Exchange in 2H15; Neo Solar Power (NSP) is going to invest US$50 million in the YieldCo. In other words, financing capability will be another key indicator to channels, hence it’s worth follow up on these financing products.
This Week’s Spot Prices
Polysilicon prices dropped 1.25% to US$15.8/kg. Fluctuation can be seen in wafer prices - Super high-efficiency multi-si wafer prices declined 0.35% to US$0.857/piece due to weaker demand; high-efficiency multi-si wafer prices dropped 0.24%; mono-si wafer prices continued to decline 0.5% to US$1.005/piece, with the average price reaching US$0.823/piece. High-efficiency multi-si cell prices increased 0.33% to US$0.304/w because of stronger demand. Basically, multi-si cell prices remained flat in both Taiwan and China as multi-si cell demand increased. But mono-si cell prices dropped 1.37% to US$0.36/w due to less demand. Module prices remained flat following stable demand. 250w multi-si module price was US$0.53/w and US$0.6/w for 265w mono-si module.
(Photo Credit: pinkserbet via Flickr)
