Financial uncertainties have put many new construction projects on ice during the COVID-19 pandemic.
However, renewable energy projects have been affected somewhat differently. According to industry experts, renewable energy’s success will rely on the choices politicians make in 2020 and beyond.
Francesco La Camera, the director general of the International Renewable Energy Agency told the Yale School of Environment, that political leaders must jump at the chance to make economic recovery packages that shift toward wind and solar power, rather than using fossil fuel options.
“The only thing we have to be afraid of,” La Camera said, “is that governments can be pushed by lobbyists to bail out sectors that belong to the past. And this is the real danger.”
The International Energy Agency (IEA) predicted that the world’s renewable power supply would grow by 50 percent through 2024. But with COVID-19 throwing a wrench into new construction, things have changed.
According to the IEA in a June report, the world’s top growth markets in 2020 had undergone four to 10 weeks of non-essential business closure or lockdown. Some of the harshest measures were in the United States. However, energy construction is considered “essential” in most states.
“The industry needed installations to be speeding up rather than slowing down at this point for countries to bring carbon-cutting realities into line with their promises under the Paris Agreement,” said Logan Goldie-Scot, the head of clean power research at BloombergNEF, in an interview with the Yale School of Environment. “Anything makes that gap bigger is hugely problematic from an emissions perspective.”
Stearns Bank’s Approach To Renewable
Signs are pointing to the renewable energy sector’s further growth. Along with improved technology, battery storage is improving more and more.
Stearns Bank has continued to make the move into renewable energy financing, with the knowledge of the positive environmental impact it can have.
Chris Hornsby of ZGlobal Power Engineering and Energy Solutions in Folsom, California, values working with financial institutions that are knowledgeable when it comes to his industry. ZGlobal specializes in power flow engineering.
“I need to work with someone who is rational, but who knows the intricacies of what we do. The market on tax equity renewable energy projects is select. It takes someone with knowledge and know-how to understand both sides,” said Chris, who is the accounting and tax manager and controller for ZGlobal. “I’m glad I was able to find David Feriancek at Stearns Bank.”
A drone view of Eagle Solar I, a three-megawatt solar grid near Bakersfield, California.
Eagle Solar I
Chris worked with Stearns Bank on financing for the Eagle Solar I, a three-megawatt solar grid outside of Bakersfield, California. The whole project covered 22 acres. The grid achieved operation in late 2019 and was completed below budget and on schedule.
ZGlobal focuses on making solar grids that operate between half a megawatt and four megawatts. Another project, called Eagle II, is in development. That could cover an additional 69 acres of land.
“It’s capital intensive to build these out,” Chris said.
ZGlobal partners with a local utility company to generate the money made on the project. Depending upon how many kilowatts of electricity are generated annually, that’s how much money ZGlobal makes off the grid.
Solar energy projects, like Chris said, require a ton of capital. Solar energy developments offer robust tax benefits, especially as clean and green energy initiatives have become more coveted.
Stearns Bank financed the project for Z-Global and its president and CEO Ziad Alaywan. ZGlobal did all the construction and project management. The tax credits that come from solar projects are then sold back to Stearns Bank as a form of repayment.
David specializes in helping get commercial projects to the finish line. That’s why he was very valuable to ZGlobal and Chris on the Eagle I project.
“David does his research. We closed on it in June (2019) and we had up and running in December (2019). That’s really good,” Chris said. “Dave is really easy to deal with and he’s reasonable. He can rationalize things quickly and get things done.”
To help cement the relationship, Chris flew to Stearns Bank’s location in St. Cloud, Minnesota, during financing discussions.
“I had great meetings with David, his team and the management team in St. Cloud,” Chris said. “You know I really wanted to get to know them because I came to Minnesota when it was freezing cold. Stearns Bank will be our first choice moving forward on other projects. I would definitely recommend them to anyone in our industry.”
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