European banks are tightening credit lines for solar power developers, reducing demand for photovoltaic panels in the world’s largest market for the technology, two of the industry’s biggest suppliers said.
Renewable Energy Corp. (REC) Chief Executive Officer Ole Enger and Michael Potter, chief financial officer of Canadian Solar Inc. (CSIQ), said banks are paring short-term revolving credit lines for solar energy developers.
“Customers are having trouble getting both short-term and long-term financing,” Enger said in an interview in Singapore today. “With such low panel prices, we were expecting demand to be much higher by now. It’s about 10 percent less than expected, maybe even more.”
Germany, Italy and Spain were the three biggest markets for solar energy last year, fueling sales for REC and Canadian Solar as well as their rivals. Banks that loaned to finance those projects are working to rebuild balance sheets to cope with an economic slump and concerns about the value of Greek and Italian bonds they hold in their reserves.
“Shorter-term financing is being hit,” Potter, whose company is the third-biggest maker of crystalline solar modules by capacity, told a conference in Singapore. “We believe that’s impacting the shorter-term demand.”
European banks are trying to shrink their loan books, which is making them either turn down loan applications or reduce the rolling loan facilities they have with solar developers, Potter said. Neither executive named the banks involved.
“You cannot get the first level of financing,” needed to start building a new project, Potter said.
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