The following case study looks at an investment group, who are looking to acquire a large portfolio of commercial solar plants.
To enable the transaction to go forward, the owners of the solar plants seek assurances that the newly formed entity will receive the same level of performance guarantees.
PV Solar Plant Performance
The continuing advancement of photovoltaic (PV) solar and its related technologies makes it an efficient form of energy that, from a price perspective, is now at parity with fossil fuel.
The dramatic growth of solar technology has been facilitated by more infusion of capital from institutional lenders seeking to take advantage of its vast potential, economies of scale and strong investment return. As the market matures, so does its complexity – consolidation; merger and acquisition; defaults and insolvencies.
These investments still rely on technologies to perform consistently and deliver a reliable, long-term return on investment. The liabilities associated with these technologies’ risks are massive and still volatile for institutional investors.
The client is the lead arranger of an investment group seeking to acquire a large portfolio of operating assets in the form of utility-scale solar plants. The subject matter of the risk is the long-term liabilities of production guarantees tied to the operations and maintenance (O&M) services provider that will be assumed in the acquisition.
The owners of the solar plants in the underlying portfolio seek assurances that it will receive the same level of performance guarantees in the newly formed entity. This will enable the transaction to go forward with the approval of the project owners while mitigating outstanding liabilities for the new owner and protecting its equity investment.