Solar and Wind Financing for Renewable Generation Projects

Solar Wind Financing

Solar and wind generation is the most standardised part of the clean-energy market, and that standardisation is exactly why capital structure decides returns. Klean Capital funds solar and wind projects as part of its mandate to finance new game-changing clean technologies, structuring each transaction around the resource, the offtake and the grid connection.

What drives bankability

Three variables dominate. The resource assessment establishes how much the asset will generate and with what statistical confidence. The revenue contract — a power purchase agreement, a regulated tariff or a corporate offtake — establishes what that generation is worth and to whom. The grid connection establishes whether it can be delivered at all. Where any of the three is weak, the right response is to re-shape the capital stack rather than to argue the model upward.

Instruments for generation assets

Klean Capital works with private equity, senior and subordinated debt, mezzanine capital and PPP funding, combined case by case. Development and construction stages usually need equity or mezzanine capital that tolerates completion risk; once a wind farm or solar plant is commissioned and generating against a contract, the same asset can support long-dated senior debt or Private Placement Investment Grade Bonds placed with institutional investors. Public-private partnership funding applies where a public authority is counterparty, landowner or offtaker.

Portfolios, repowering and acquisitions

Single-asset financing is often the least efficient route. Aggregating several sites into a portfolio spreads resource variability and justifies the cost of a bond issue. Klean Capital also funds projects on a joint venture basis with developers, and purchases existing operational projects through succession plans, which gives owners of an ageing or sub-scale portfolio a route to exit or to repower.

Technical work behind the funding

Klean Capital Inc. is wholly owned by Klean Industries, which provides feasibility studies, design and engineering, due diligence and turn-key EPC (DBC) delivery. Yield assumptions, interconnection costs and operating budgets can therefore be tested by engineers before they are financed, not after. Since 1998 the firm has raised funding for over a hundred different transactions across clean energy and resource recovery.

Risks funders price carefully

Curtailment exposure, grid queue position, merchant tail risk beyond the contracted term, and the credit quality of an offtaker are the issues that most often reset pricing on a solar or wind transaction. Each is manageable when it is identified early and reflected in the structure, and expensive when it surfaces late in diligence. Klean Capital would rather see these assumptions stated plainly in the model and structure around them than discount a whole project for one unresolved variable.