Why scoring a business case for solar in Singapore has become tougher

摘要

Singapore is aggressively ramping up its solar energy capacity, but inadequate access to funding for solar generation companies might prove to be a significant roadblock for the city-states renewable energy agenda. Jacqueline Tao, energy analyst at the Energy Studies Institute (ESI), noted that solar PV SMEs typically face higher financing costs compared to conventional power generation players. For instance, larger energy players have a debt-to-equity ratio of 50/50, much lower compared with 70/30 for solar PV SMEs. "Meanwhile, the cost of equity for traditional players is just 6%, while that for SMEs ranges from 9% to 15%. Banks also charge an interest rate of 4% for conventional players with a credit rating of Baa, but SMEs need to grapple with interest rates as high as 5.6%. Larger firms can also tap bond markets, which are off-limits to solar PV SMEs due to size restrictions," she noted.