The Myth of Bankability - Definition and Management in the Context of Photovoltaic Project Financing in Germany

Hampl, N.; Lüdeke-Freund, F.; Flink, C.; Olbert, S. & Ade, V. ; The Myth of Bankability - Definition and Management in the Context of Photovoltaic Project Financing in Germany, Goetzpartners & COLEXON (eds.) (2011)

28 Pages Posted: 27 May 2012 Last revised: 18 Mar 2013

See all articles by Nina Hampl

Nina Hampl

University of St. Gallen

Florian Lüdeke-Freund

University of Hamburg, Chair of Capital Markets and Management; Leuphana University, Centre for Sustainability Management (CSM)

Christoph Flink

Nordic International Management Institute (NIMI)

Sebastian Olbert

Goetzpartners Management Consultants

Valentin Ade

COLEXON Energy AG

Date Written: August 26, 2011

Abstract

During the past years, Germany witnessed a remarkable boom in solar photovoltaic (PV) installations. Favorable regulatory frameworks as well as a maturing global PV industry, offering continuously lower prices, were just two of the main drivers leading to the industry’s expansion. Though, an increasing inflow of capital was another necessary factor for this development. Monitoring the new capacity installations in Germany reveals a high confidence level of investors and financial institutions in the industry’s financial opportunities, as the financial crisis and the following economic downturn did not lead to a significant slowdown in total PV installations. Although being a rooftop market mainly, Germany also accounts for the most ground-mounted megawatt installations globally with 1.4 GW of newly installed capacity in 2010. Nonetheless, the financial crisis has also left its mark. In 2008 and 2009 credit markets were mainly dried up, due to the collapse of some major financial institutions. Liquidity in the financial markets, at that time, had become a major issue for large-scale PV projects. As a consequence of the credit crunch, banks needed to recondition their lending criteria and the assessment process for project finance became stricter. Banks began to “cherry-pick” projects of outstanding quality and as a result the bankability of projects, project components and stakeholders received increasing attention. All in all, managing bankability is closely related to the concept of managing quality – and today quality is managed actively with high attention given by companies’ top management, as it serves as a key differentiation factor in global competition across many industries. The PV industry is well-advised to apply such concepts to the crucial issue of achieving bankability for projects. The following report outlines promising approaches for doing so.

Die deutsche Version dieses Artikels kann unter folgendem Link abgerufen werden: http://ssrn.com/abstract=2067076

Keywords: photovoltaic, photovoltaik, bankability, management, solar energy, solar industry, project finance, investment, debt capital, bank

JEL Classification: O30, G30, Q20, Q42

Suggested Citation

Hampl, Nina and Lüdeke-Freund, Florian and Flink, Christoph and Olbert, Sebastian and Ade, Valentin, The Myth of Bankability - Definition and Management in the Context of Photovoltaic Project Financing in Germany (August 26, 2011). Hampl, N.; Lüdeke-Freund, F.; Flink, C.; Olbert, S. & Ade, V. ; The Myth of Bankability - Definition and Management in the Context of Photovoltaic Project Financing in Germany, Goetzpartners & COLEXON (eds.) (2011). Available at SSRN: https://ssrn.com/abstract=2067077 or http://dx.doi.org/10.2139/ssrn.2067077

Nina Hampl

University of St. Gallen ( email )

Tigerbergstrasse 2
St. Gallen, 9000
Switzerland

Florian Lüdeke-Freund (Contact Author)

University of Hamburg, Chair of Capital Markets and Management ( email )

Faculty of Business, Economics & Social Sciences
Von-Melle-Park 9
Hamburg, 20146
Germany

HOME PAGE: http://www.SustainableBusinessModel.org

Leuphana University, Centre for Sustainability Management (CSM) ( email )

Faculty of Sustainability
Scharnhorststr. 1
Lüneburg, 21335
Germany

Christoph Flink

Nordic International Management Institute (NIMI) ( email )

Nordic
China

Sebastian Olbert

Goetzpartners Management Consultants ( email )

Munich
Germany

Valentin Ade

COLEXON Energy AG ( email )

Hamburg
Germany

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