SVB Failure Will Not Leave a Void in Solar Development Finance Market


Noting the recent collapse of Silicon Valley Bank (SVB) and the firm’s role in sustainable lending, several industry players have predicted a slow-down in what was predicted to be an extremely active year for solar development.  But as updates continue to emerge it’s important to recognize the role of specialty non-commercial bank lenders, such as Sol-REIT, who are well-positioned to put capital to work towards investment in renewables. 

“The condition of commercial banks is certainly important to the solar and fin-tech industry, but capital and talent is appropriately moving towards the energy transition in a manner that will ensure solar development accelerates to meet market demand,” suggests Sol-REIT CEO, Mark Settles. 

Settles, who’s experience includes working directly with the executive team at JP Morgan during the 2008 banking crisis, spoke at the Infocast Solar & Wind Finance Summit this past week (March 13-15). Representing Sol-REIT alongside Keybanc, Nomura and Lazard among others, the panel had the fortunate timing to address breaking news of regulatory actions against SVB,SBNY and more.  

The financial teams attending the conference were monitoring the situation with SVB, but the general consensus is that there is no funding gap reported Settles. What is happening in the commercial banking industry is are-affirmation of the importance of diversification and long-term outlook toward value generation. 

“Sol-REIT is a specialty lender so we have the advantage of deploying capital into an industry we know extremely well, while our diversification is derived from supporting client developers and EPCs with a variety of off-taker, geography and project type including community solar,” stated Settles. 

Community solar was mentioned in several media reports as a sector that would be caught in the headwinds of SVBs failure. The bank was reported to have led or participated in 62% of community solar projects – but specialty lenders such as Sol-REIT, the positive impacts of recent IRA legislation and other initiatives are aligned to make sure that doesn’t happen.   

Sol-REIT’s $175 million commitment to fund community solar over the next two years, announced as the firm joined the National Community Solar Partnership (NSCP) in January 2023, is one such example. Meanwhile organizations such as NCSP have created accelerator programs to support developers and communities with the process of building community solar while definitions of ITC adders have been clarified. The industry is also seeing a better supply chain flow.

 Is everything aligned for community solar? No, interconnection issues remain an obstacle for many developers, and PPA rates haven’t quite caught up to the residential market so some projects don’t pencil out, but the absence of capital will not be an issue for well-developed projects.  And for those developers and EPCs interested in capturing the entire value of the projects they develop, Sol-REIT’s construction to permanent finance solution, SolarC2PTM is particularly well-tailored to meet the needs of community solar developers who may have previously relied on commercial bank financing.

 Note: As of publication, Sol-REIT’s balance sheet is not currently intertwined with SVB, SBNY or other banks mentioned in reports of potential rating downgrades.