Financing for renewable energy projects has the opportunity to use more innovative and flexible structures to attract investment.

Speaking on the sidelines of MEED’s Clean Energy conference, Karim Nassif, associate director of infrastructure ratings at Standard & Poor’s Ratings Services, said that one of the challenges with solar is that it does not generate much power relative to conventional power projects, but that the finance is becoming more innovative.

“Financing flexibility in the energy space is a great thing, because it can encourage governments and sponsors to venture more into this sector,” he said.

“The beauty of putting your fingerprints into solar early on is that costs will only come down with time, and the element of subsidy require will potentially gradually wither away and make it that much more attractive as an alternative.”

Nassif said there are three key elements to analyse when planning to finance a renewable energy project such as solar:

• Understand and be comfortable with the reason the project is being undertaken
• Look at the structure and longevity of the contracts that generate the finances that help the project repay its debt
• Be confident about the parties involved and their track record.

Additionally, agencies also analyse the technology being used and performance risk and performance risk of the asset.