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Case study: choosing right financing brings long- term benefits to solar power projects

Case study: choosing right financing brings long- term benefits to solar power projects

„Frankly, there is plenty of capital available for quality assets. At xFigureFinance, we structure renewable energy projects in a way that meets the requirements of capital providers, thus enhancing their overall returns on investment. 

Rositsa Chopeva, partner at xFigureFinance

As a financial advisor experienced in the renewable energy sector, during the past year alone our team has been engaged in more than 400MWp solar power plant projects in Bulgaria and the region. Our primary focus is on structuring and sourcing financing for greenfield projects and facilitating M&A transactions in the space. However, for some projects our advisory role extends to a wider range of services from the early phase of development. We share more details on the scope of our services in the case study below.

The beginning

When our client, a publicly listed company engaged in manufacturing, inquired about our service, only the land plot for the 25 MWp solar project was secured.

We immediately took a liking to the project developer’s plan for the solar park to supply the nearby energy-intensive manufacturing plant with a fraction of its generated electricity. In this way, the manufacturing plant would be able to drastically reduce its emissions, lower its energy costs and retain its workforce in a geographical area with high unemployment rate and limited opportunities. The project also utilises a legacy industrial zone which would otherwise be difficult and economically unviable to repurpose.


We started off our work and analysis in the development phase with a preliminary financial model, using the initially available information. Speaking of financial models, xFigure is able to draw upon an extensive library of insights and lessons learned from our numerous recent projects. Thus, even at the preliminary stage, we provide adequate input and benchmarks on key assumptions like capital expenditures, solar yield, operating expenses, market price curves and debt structure. This information showcases to our client at an early stage key indicators such as risks and expected KPIs of the project, equity and project internal rate of return (IRR), payback period, net present value (NPV) under weighted average cost of capital (WACC) and more. 

Our financial model turned into an instrument for investment decisions. The client was able to see the effect of their selected options for capital structure, engineering, procurement and construction (EPC) partners, operation and maintenance (O&M) offer and power purchase agreement (PPA) on the expected overall returns. In truth, we kept on using and updating the financial model throughout the development and construction phases up until commercial operation.

The process beyond the numbers

xFigureFinance’ s role, after assessment of the project viability, was to advise on the optimal capital structure choosing between multiple options for debt financing, mezzanine, green bonds, and pure equity. Knowing the strategy and goals of our client, we proposed a limited recourse project financing structure.

We presented the final version of our financial model to several financial institutions. After reviewing their initial proposals, we narrowed down our choice to two lenders and after several iterations, we were able to reach a conclusive offer with the preferred one. 

The achieved results

Having been active in the local renewables’ scene for more than ten years and taking the appropriate steps to limit the perceived risks for banks, we were able to limit the recourse of the project to the land upon which the PV park was built and a sponsor guarantee until the turnkey phase has been reached. Due to that, we negotiated a limited drawdown amount even before reaching construction permit so as to cover ongoing expenses and secure equipment (modules, inverters and substation) at favourable prices.

Furthermore, we negotiated less punitive loan covenants and increased the financial leverage of the project without altering the risk of default under the tested scenarios. Finally, we secured 100% dividend release up to the legally permitted amount for equity shareholders after completion of annual review by the bank and negotiated a separate VAT facility.

In a nutshell

Structuring projects so as to attract bank financing requires the ability to lead and close complex transactions, thorough knowledge of bank requirements and regular presence on the lending market.

The results for our client beyond complex financial documentation demonstrate the comfort to have adequate capital on time, repayment plan based only on the plant cashflow, allowance to get dividends even during the first operational years and therefore secure a double-digit return on their investment.