|Facilitating the due diligence of an integrated solar plant project
Financial institution represents a branch of larger international financial group.
Financial institution offers its clients a complete range of banking and other financial services, which, in addition to the Bank, consists of other related companies.
Financial institution is actively supporting investments in numerous sectors and is especially interested in expanding their services in energy efficiency and renewables sector. Financing and refinancing services in energy efficiency sector are still relatively new to financial institution and they are exploring ways on how to learn more about EES market and projects in order to develop internal procedures and off the shell products.
The organisation was interested in facilitation services, especially in due diligence of integrated solar plant project. Since financial institution was looking at expanding their business operation in energy efficiency and renewables sector REGEA approached financial institution to present refinancing model and refine developed tools. Financial institution expressed interest in learning more about EES projects and understanding risks and processes involved in development and operating phase of EES projects. Financial institution and REGEA agreed that best way to do this was to analyse one of projects that they need to appraise and decide whether to finance.
Financial institution provided REGEA with project documentation and REGEA provided revision services and due diligence of project. REGEA presented developed report and answered to questions raised by financial institution.
Main questions raised were regarding risks in project development phase regarding needed permits, quality and reliability of planned technology and equipment and predictions regarding future energy prices.
Process has shown that financial institution has determination for better understanding business cases behind EES projects and these projects are in focus of their activities but there is still a lot of unknowns that prevent larger uptake of EES financing. Lack of knowledge of EES project processes prevents financial institution to fully understand risks involved in project and to rate them accurately. These problems should be solved as number of EES projects grows and EES market matures in Croatia.
Similar to other pilots regarding facilitation services in Croatia, high need for technical, legal, and financial “due diligence” services for financial institutions is confirmed. For finance market to be more open for investing in EES projects, EES market needs to mature and grow so that finance institution have more information, knowledge and larger data base in order to fully understand risk profile of EES projects.
Even though tools developed under REFINE can help financial institutions to ease and speed up the process of due diligence of EES projects to be financed or refinanced, there is still a need for external expert advisory to financial institutions. Further development of performance guarantee instruments as well as further development of data base of all existing EES projects with details on problems and risks in different phases of EES project development should also help financial institutions to learn more about EES projects and to gather more experience.
For more information, please contact: