What’s holding it up? Some blame the high cost of the technology. Others point at the see-saw nature of tax incentives.
Personally, I blame banks. If you want to build a utility-scale solar farm today in the U.S. youmight be lucky to get money at 9 percent to 11 percent, according tovarious sources. If novel technology like CIGS or concentrators areadded into the mix, expect to pay 2 percent more. The U.S. federalgovernment, meanwhile, is currently giving money to large banks atnearly 0 percent.
“Why do I have to pay more for money than an apartment building,” asked Tim Keating, vice president at Skyline Solar, which makes a concentrating solar system. “Why are we paying a four-percent risk premium?”
In Germany, the same solar farm might be able to obtain money (a blend of equity and debt) at 7 percent or less.
The really galling part of this situation is that solar has become perhaps the safest investment in the world.
Think of it. Project financiers loan money to developers to erect power plants from readily available components that continually drop inprice. Unlike a nuclear plant, solar plants don’t take years to build.Even multi-megawatt projects only take a few months. The biggest risksare (1) getting building permits and (2) landing a power purchaseagreement. But since developers don’t seek financing until after theseproblems are resolved, those risks vanish.