Solar energy is key to the UK’s energy future but solar farms also need to pass a “high quality” test demanded by investors, banks and funds. What are the key legal questions investors and funders need to consider when investing in UK solar?
The rate of deployment of ground-mounted solar in the UK has been staggering. At the closure of the Renewable Obligation scheme to ground-mounted solar farms exceeding 5MW on 1 April 2015, it is estimated that the UK’s solar generating capacity had reached 5,709 MW. The efforts of the developers and contractors to meet changeable and challenging deadlines are to be applauded.
Even though opportunities remain for projects benefitting from grace periods and also for projects below 5MW, the new world of Contracts for Difference (CfDs) is expected to be challenging. The focus of activity in the sector is expected to shift from project development to financing, the acquisition of operating projects and consolidation within the sector.
Banks, private equity infrastructure funds, pension funds and yieldcos are active investors in this sector. While all have their individual needs, they will each consider the core features and will need to pass strict requirements at their investment and credit committees. What will they look for?
