Financing — PV Encyclopedia
Financing
BT model: Financing structure — the project owner pays 30% of capital, obtaining financing for 70% from the bank for 10 years. Ownership remains with the owner. After one year of operation, the owner can sell the power station to a third party (or the roof owner) and sign an O&M contract. The one-year operation record helps the third party accurately estimate the financial return, effectively reducing purchase risk. SINOTECH makes profits from selling the power station and providing O&M services.
Owner self-built model: Financing structure — the owner pays 30% of capital, obtaining bank financing for 70% for 10 years with the aid of SINOTECH. Ownership remains with the roof owner. With only 30% of capital investment, the roof owner acquires the power station as an asset; money previously spent on electricity bills repays the bank loan, effectively capitalizing the expense. Once the loan is repaid, the owner has full title to the plant and the cost of electricity other than O&M is virtually zero. SINOTECH makes profits as EPC and from O&M services.
Energy Contract Management model: Financing structure — the project owner (SINOTECH) pays 30% of capital, with bank financing of 70% for 10 years. The roof owner pays nothing, and ownership belongs to SINOTECH. The roof owner pays the electricity bill to SINOTECH at 90% of the energy savings and unit price — giving up the roof space yet saving considerably on electricity and earning a green reputation. SINOTECH collects the fees and tax concessions, deducts O&M costs, repays the loan, and keeps the difference as free cash flow.
Leasing model: Financing structure — the owner pays 30% of capital, with bank financing of 70% for 10 years. The roof owner pays nothing; ownership belongs to SINOTECH, which leases the plant back to the roof owner for a fixed rent. The roof owner only pays the fixed rent to use the solar power generated. SINOTECH uses the rent to repay the loan, deducts O&M costs, and keeps the difference as income.
Advantage: stable returns over 25 years, with obvious gains after the bank loan is repaid.
Consideration: the capital structure is not ideal — heavy upfront investment recovered gradually, resulting in high initial funding pressure. A deposit from the roof owner can alleviate this, and preferential rent may also be considered.