Friday 20 February 2009

Green energy sector feels chill wind of credit crunch

THE CREDIT crunch is apparently taking the wind out of the renewable energy sector’s sails.

Some analysts, and even the Government at one point, were claiming the nascent green energy industry was immune from the squeeze on business lending – that appears to be no longer the case.

Bord Gáis chief executive John Mullins noted this week that wind farm developers were having difficulty raising the cash they needed from banks to pursue their plans.

This leaves them in a bit of a bind. Most of the applications for planning and licensing of wind farms come from small operators. These are ultimately hoping to add value by getting these projects through the initial stages before selling them on to bigger players. The bigger players have the resources to deliver the goods, but may not be necessarily interested in the initial development stages, which involve applying for planning, licensing and grid connection.

The trick for smaller operators is to bring projects to a point where they are attractive to bigger operators, and then sell them on. That is likely to prove more difficult if they cannot get the cash to bring their proposed wind farms to first or second base.

However, Mullins says Bord Gáis, which is spending about €250 million on renewable energy projects, will buy wind farms at an earlier stage of their development. There may well be disadvantages in this but, on the plus side, in the current market these projects will be cheaper to buy.

Irish Times

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