To secure financing for solar and energy storage projects, developers face the challenge of passing a lender’s “bankability†evaluation. Bankability essentially hinges on investor confidence and the perceived risks tied to the potential returns of a project. One of the most pivotal stages in this process is the due diligence conducted by an independent engineer (IE). This step is crucial because it can either validate or derail a project. Projects presented to financiers and lenders before their designs are fully finalized risk being scrutinized and ultimately denied funding.
Engaging an owner’s engineer (OE) to pre-review development designs serves as the best safeguard against potential delays, costly revisions, or even project failure due to adverse IE feedback. Conceptually, this process mirrors preparing for a legal case. A skilled attorney would never present a major case to a judge without first conducting a mock trial. Similarly, a seasoned project developer should not expose their designs to a lender’s due diligence without first having an OE conduct a preliminary assessment. Here, I’ll outline the most common pitfalls in development designs during bankability assessments and explain how upfront OE vetting adds significant value.
### Technology Selection and Qualification
Given that solar assets operate for decades, the quality and reliability of technology are paramount to investors. Developers must substantiate their claims regarding reliability and performance with credible data.
**Look Beyond First Costs:**
When financing a project, lenders require assurance that the design employs technologies that will endure throughout the project’s expected lifespan. While cost per watt is a critical factor in economic modeling, prioritizing short-term savings at the expense of long-term value is shortsighted. Remember, cost per watt is a one-time expense, while lost energy production impacts costs over 30+ years. Failures can diminish project value, escalate operational costs, and reduce energy output. With rapid technological advancements in the solar sector, having deep expertise in the chosen technologies is essential, as vendor selection and product specifications significantly influence a project’s risk profile. Be cautious of manufacturers offering outdated technologies at discounted rates, as this might signal a struggling company in decline.
**Prove It or Lose It:**
Qualifying new vendors or technologies is particularly challenging when dealing with investment-grade assets. It’s tempting to be swayed by promises of significant field performance improvements. However, during an IE review, unsupported performance claims—even if theoretically sound—will not hold up. Without demonstrable evidence, you won’t progress far enough to capitalize on these gains since lenders won’t approve the project. Always support your claims with data.
### Performance Model Review and Validation
In my experience, the performance model—or the financial model it supports—is the primary source of issues during IE reviews. These issues usually arise from model limitations or unrealistic expectations.
**Work Within the Model’s Limits:**
The project performance model cannot account for every aspect of the project design. For instance, if you install a PV system using dual-axis trackers on a south-facing slope, you can model the benefits of dual-axis tracking or the advantages of a south-facing location. However, due to limitations in the PVsyst model, you cannot combine both factors. Certain systems may meet real-world entitlements but lack the ability to reliably demonstrate these benefits financially.
**Set Realistic Expectations:**
During project development, teams often treat the design and performance model interchangeably as tools. Engineers develop a baseline design, model its performance, adjust the design, re-model, and iterate until they achieve optimal results. While this process helps refine the design, it doesn’t align with bankability considerations. Lender IEs evaluate the performance impacts of variables outside typical design optimizations, such as soiling losses, probabilistic weather file analyses, and uptime availability. These factors can collectively reduce model outputs by several percentage points. For projects with slim margins, even a small percentage loss can push the design below acceptable levels, jeopardizing the project’s viability.
### Engaging an OE Mitigates Risk and Ensures Margins
Lenders typically introduce an IE at the 30% design stage, a point where developers haven’t yet incurred significant expenses but have already invested heavily in engineering. At this late stage, no developer wants to walk away from a funding request without securing approval.
The best strategy to mitigate project risk and maintain margins is to involve an Owner’s Engineer to pre-review designs and production models ahead of lender due diligence. When Pure Power acts as an Owner’s Engineer, we identify many red flags that lead lenders to reject projects. Additionally, we ensure the project model exceeds the financier’s minimum requirements. This methodical and conservative approach guarantees sufficient buffer in the final design, preventing unforeseen real-world challenges like unanticipated array exclusions from derailing project cash flows.
By taking these proactive steps, developers can enhance their chances of securing financing and ensuring long-term success for their solar and energy storage projects.
Industrial large fans often have diameters of several meters, weights of tens or even hundreds of kilograms, and are suspended for installation and rotation. It is necessary to consider various aspects such as speed, material, noise, and energy consumption. The safety of industrial large fans is closely related to the material of their blades and the structure of the entire machine, and there are strict requirements for material strength and toughness.
Warehouse large fan, workshop large fan, Installation of large fan in workshop
Julai (Chongqing) ventilation equipment Co.,Ltd , https://www.julaifans.com