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Photovoltaic Financing for Business: Opportunities for 2024
In this article, we will look at the various options for financing photovoltaic systems for businesses in 2024, including bank and government programs.
The shock increase in electricity prices on the free market in 2022 has made investments in a photovoltaic system, both for selling electricity and for covering one’s own needs, extremely sought after. On the one hand, it contributes to reducing operating costs and on the other hand, it contributes to energy independence and reducing the carbon footprint in the long term.
At the same time, the capital costs of designing, supplying equipment and building photovoltaic systems can be significant and can often prove to be a major obstacle. Fortunately, there are various options on the market for financing photovoltaic systems for businesses that can significantly ease the financial burden. These include bank loans, which allow for deferred payment of the investment over time, as well as various government programs for grant-free financing of photovoltaic systems, which provide subsidies covering part of the costs. These options make the implementation of solar technologies more accessible and profitable for companies that want to reduce their carbon footprint and achieve greater energy independence.
Bank programs for financing photovoltaics for businesses
Recently, the banking sector in Bulgaria has been offering a number of new products, especially for small and medium-sized businesses, that aim to meet the need for financing photovoltaics. More and more Bulgarian banks are offering a variety of investment loans to support businesses in the construction of photovoltaic systems.
Here are some of the most attractive options:
UBB, part of KBC Group, offers an investment loan for financing photovoltaic systems up to 500 kW for electricity production for own consumption and/or sale of electricity, which aims to transform the main energy sources and reduce carbon emissions. Borrowers can be legal entities registered under Bulgarian law, as well as individuals exercising liberal professions and agricultural producers with a minimum of 18 months of active activity. The maximum loan amount is BGN 600,000, and the financing rate is up to 90% of the project value (excluding VAT) or up to 100% of the project value (excluding VAT) when participating in European grant programs. The photovoltaic installation, the subject of the loan, can be used as collateral, with other eligible collateral being real estate, machinery, vehicles, receivables, financial assets, capital subsidies under a program, financial instruments under a guarantee.
UBB also offers an investment loan for the construction of photovoltaic installations up to 2 MW for the own needs of small and medium-sized enterprises, corporate clients and agricultural producers. The loan is part of the UBB Sustainable Financing Program and aims to reduce electricity costs and reduce the carbon footprint of companies. The amount of financing is up to 2 million leva with a repayment term of up to 120 months after the grace period expires. The down payment requirements are relaxed, and the repayment schemes can be tailored to the characteristics of the given business. If the photovoltaic plant produces a larger amount of energy than is needed for its own needs, the excess energy can be sold on the open market.
UniCredit Bulbank also offers an investment loan for the construction of a photovoltaic system for the production of electricity for the company’s own needs at preferential interest rates, simplified collateral conditions and with the possibility of a grace period of up to 12 months. The amount of the monthly installment under the loan can be adjusted to the seasonal nature of the productivity of the photovoltaic system. The amount of financing is up to 90% of the amount of installed capacity, and the requirement for own participation is at least 10% of the amount of the investment.
The bank also offers a line with preferential terms for financing projects under the procedure of the Ministry of Innovation and Growth for “Construction of new RES for own consumption in combination with local energy storage facilities in enterprises”, which was carried out in 2023. The aim is to provide beneficiaries of the program with easier access to financing before receiving the grant under the procedure.
Allianz Bank offers a loan to finance the costs of building a photovoltaic system up to 3 MW for the production of electricity for own consumption or production and sale of electricity on the free market. The bank offers a credit line to finance up to 80% of the investment value, which includes land purchase and design costs, for a maximum period of 12 years and with a grace period of up to 6 months. Monthly installments can be adjusted according to the electricity produced, but the annual installments are equal. Additional reliefs are offered for a photovoltaic system with a maximum power of up to 30 kW.
D Bank also offers a specialized long-term loan for the construction of photovoltaic installations for electricity production with an installed capacity of up to 2 MW. The target group is local legal entities carrying out business activities, registered in accordance with the current legislation of the Republic of Bulgaria. The loan amount can be up to 80% /excl. VAT/ of the estimated costs for the purchase of equipment and subsequent installation for the construction of a photovoltaic system. The maximum loan term is 120 months, and the maximum grace period until the plant is put into operation is 12 months. With this product, monthly installments can also vary according to the plant’s productivity with equal annual installments.
Postbank actively finances projects for the construction of a photovoltaic system up to 2 MW for corporate clients’ own needs, with excess energy being sold on the open market. The requirement for own participation is a minimum of 10% of the investment amount, and the maximum financing limit is BGN 4 million. The maximum loan term is 12 years with a grace period of up to 18 months. The bank provides the opportunity to negotiate an individual/seasonal repayment plan and a final installment on the principal (bullet) in the amount of up to 30%.
FiBank offers loans to project companies in need of financing for the construction and/or refinancing of construction/acquisition costs of a photovoltaic system for electricity production for sale on the free market. With a maximum loan term of 15 years, a grace period that can be extended until the plant is put into operation and a seasonal repayment plan tailored to electricity production, the bank has developed a product that is tailored specifically to the difficulties that investors face in the process of connecting the plant and the variable conditions for selling electricity on the exchange.
Increasingly tangible need for financing storage systems
Balancing the electricity system in Bulgaria has become increasingly difficult recently. Photovoltaic systems in Bulgaria’s electricity mix have reached over 3 GW of installed capacity, creating an imbalance in electricity supply and demand, leading to record low, even negative, electricity prices on the exchange. Investments in storage systems provide a valid solution to address this problem.
Storage system financing programs
In March 2024, the Ministry of Energy launched two funding schemes under the National Recovery and Resilience Plan (NRRP) that aim to finance projects for renewable energy generation systems with energy storage systems. One scheme targets storage capacities from 200 kW to 2 MW, and the other is for capacities above 200 kW. The aim of the first procedure is to build a minimum of 200 MW of solar and wind generation capacity in combination with a minimum of 100 MW of storage systems. The total budget is BGN 107.5 million, and the aid will be used entirely to cover the costs of installing the storage facility, with the aid intensity being up to 50% of the eligible costs or around BGN 1.08 million per MW of installed storage capacity.
The aim of the second procedure is to build a minimum of 940 MW of generation capacity in combination with a minimum of 200 MW of storage systems. The total budget is BGN 428 million, with the aid intensity being up to 50% of the eligible costs or BGN 743,215 per MW of installed storage capacity. Under both procedures, the minimum capacity of the electricity generation system eligible for financing is 400 kWp, and the minimum size of the storage system to it is 200 kW. Systems that use the energy for sale on the free market, as well as systems that partially use the energy for their own needs, are financed. The deadline for submitting documents for participation is June 12, 2024, and the conditions for participation give an advantage to large companies with serious financial strength, as applicants must have, independently or through their shareholders, equity of at least BGN 1 million.
Conclusion
Investing in photovoltaic systems is one of the most attractive business opportunities at the moment. With the availability of various bank and government financing programs, businesses have access to the necessary resources to implement their projects. Continue to follow our blog for current news and investment opportunities in photovoltaic systems.
