Climate Changed

Banks Are Sweetening Their Terms for Solar as Confidence Rises

Lenders take smaller cut to win deals amid fewer U.S. projects
Panel installations set to rebound in 2019 after two-year drop

An employee of SunPower Corp. trims the edges and checks solar panels at the SunPower Corp. module manufacturing plant at Flextronics in Milpitas, California.
Photographer: David Paul Morris/Bloomberg

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By Brian Eckhouse

April 19, 2018 at 4:00 PM UTC

Updated on

April 20, 2018 at 2:01 AM UTC

This article is for subscribers only.

Interest rates are rising, making debt much more expensive for capital-intensive industries across America. But there’s at least one exception: the solar business.

While the cost of borrowing has been increasing since 2016, some banks are taking a smaller cut to win deals from solar developers. Loans of seven years or longer can be obtained for 137.5 basis points over the benchmark London Interbank Offered Rate, or Libor, down from as much as 200 basis points last year, said Keith Martin, a project-finance attorney at Norton Rose Fulbright LLP. Even the higher-rate loans for residential projects are getting cheaper.