Originally posted in Credit Suisse Alternative Energy Report, authored by Michael Weinstein, Maheep Mandloi, Khanh Nguyen.
“We attended the Renewable Energy Finance Forum Wall Street (REFF) this week in New York. The event was attended by lenders, tax equity providers, and major renewable developers.
More Discussions Around Shorter PPAs and Merchant Risk: Over the past year, we have been observing more discussions regarding shorter PPAs (10-15 years) among tax equity and debt providers, especially as 20-year wind and solar contracts are now below $20/MWh (wind) and <$25/MWh (solar) and cheaper than other technologies/merchant markets. Many investors are now more comfortable with merchant power risk, though most still need insurance products to cover unhedgable long term weather and basis risk.
Debt coverage ratios improving: Debt coverage ratio for large scale solar projects has come down from 1.3x last year to 1.25x without any insurance, and to 1.1x for P50 insurance (which guarantees energy production).”