Shanghai releases policy encouraging financing of distributed solar


The policy, the first of its kind published by a local government, allows investors of distributed solar PV projects in Shanghai, China, to obtain bank loans by using future income calculations, including tariff revenues and government incentives, as collateral.

Under the conditions agreed, loan periods will range from one to five years, while interest should be within 15%, plus the basic loan rate. Furthermore, the loan has to be guaranteed by a bonded company which, as its fee, will charge 1% of the total loan.

Shanghai’s municipality government has appointed local state-owned companies to act as interactive service agents, bonding companies and pilot banks for the new policy. The goal is to help small and middle sized investors of distributed PV projects obtain loans faster and more easily.

The policy was studied by government for more than three years. Calculations by industrial insider, PVPlus, a third party platform focused on distributed online trading, estimates the loans will increase the average internal rate of return (IRR) of local distributed PV projects from 15.14 to 20.86%.

"The policy is unique and creative, and with high practicability. With good supervision and risk control this policy will help the development of distributed PV in Shanghai. And presenting good samples for other areas," commented Qiming Han, analyst of public services industry of Shenwan Hongyuan Securities.

Edited by Becky Beetz