April 29, 2020
The solar power market is rapidly growing and highly dynamic, which requires a deep understanding of the trends and dynamics of the energy industry, a highly experienced team that understands how to underwrite, execute and manage investments, and an relationship-oriented approach which builds lasting relationships with the entrepreneurs who are driving the sector’s growth.
These requirements gain even more importance amid the current COVID-19 crisis. Despite its strong outlook, the solar power generation sector, like nearly every other industry, has been affected by the economic slowdown. With construction and other delays highly probable—along with the unique, everyday challenges that come with the territory—developers, solar entrepreneurs and even investors, now more than ever, will need supportive financing partners to support their goals.
What should industry participants look for in a financing partner?
Long-term Relationships
Financing partners who are focused on building strong, multi-year relationships are much more likely to provide capital in a repeatable, cost efficient manner. Repeatable, and scalable, capital solutions are the key here.
In addition, financing partners who have long-term relationships with developers understand the unique challenges those developers face to develop, construct, finance and operate solar projects. Those who can assemble a highly experienced team of investment professionals, supplemented by all the necessary third parties, can best support developers’ goals and work to close transactions in an efficient manner.
Clear Investment Strategy
A clear investment strategy is a must. Developers and investors alike should seek out those financing partners who display this continuously through, for instance, comprehensive transaction reviews to determine whether the prospective investment is consistent with established policies, portfolio strategy, and investment parameters.
Regardless of project size, financing partners need to adhere to strict underwriting standards, supported by a full diligence and documentation process.
Institutional Investment Process
The support of an institutional quality administrative infrastructure, along with an investment team with decades of experience investing in power and renewable energy projects, can be extremely advantageous. At Advantage Capital, for example, our senior management has worked together for almost 30 years.
Financing partners should maintain a well-defined process for sourcing, selecting, analyzing, executing, and asset management to ensure that capital is deployed in an efficient and cost-effective manner, and in compliance with investment strategy.
Asset Management
A strong financial partner should employ a continued asset management approach centered on the implementation of business plans consistent with original investment cases, best practices, and operational improvement. Post-investment monitoring forms a critical component of the asset management process and maintains real-time performance tracking and regular operating reporting requirements.
In addition, financial partners should be firmly committed to timely and accurate financial reporting, including but not limited to audits and K-1 tax forms.
Summing it up
Whether you are a developer or solar entrepreneur looking for tax-advantaged project equity capital, or an institutional investor in solar power generation projects, a strong financing partner—with an outstanding investment track record, rising assets under management and repeat investments with existing developer relationships—is essential.
The investments, portfolio companies and recommendations listed on this website represent only a sample of companies that have received investment capital from Advantage Capital-related entities. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities highlighted herein or contained in any other information provided by Advantage Capital. Past performance is no guarantee of future results. For a full list of companies, please click here.
