Macquarie Bank enters solar finance market in Australia

Posted 12th February 2014 by Stuart

Macquarie Group, Australia’s biggest investment bank, has entered the solar financing market in Australia. Macquarie Group entering the solar financing market is likely to cause significant lift for the rooftop and commercial solar industry. The interest in solar finance was revealed by Macquarie CEO Nicholas Moore in the group’s operational update. Few details were released, apart from the fact that it is a “recent” initiative, but it follows on from a series of large solar financing investments in the UK, Japan and the US, and is expected to be a fore-runner of interest from other major banks in Australia.

It is generally acknowledged in the Australian solar industry that the next major breakthrough in the market will be in finance. The cost of solar modules are unlikely to fall significantly, and it is quite possible that remaining incentives, such as the small scale renewable energy scheme, may be removed or diluted. Financing is critical component of the cost of solar. If major banks such as Macquarie enter the market and are followed by the “Big Four” – as many say they are poised to do – then the cost of capital is likely to reduce significantly. So far, only smaller and niche financing houses – as well as private investors – have provided finance to rooftops solar.

The entry into the market of major banks is also likely to spark innovation in financing, such as solar leases and other products that will unlock market blockages in low-income housing, rental accommodation, apartments, and community projects, as well as the burgeoning commercial market. Macquarie Capital also struck an alliance with GE, to cater to the growing global demand for infrastructure funding and development; also with a focus on renewable energy and power delivery. Solar has been on Macquarie Group’s radar for a while, with its European analysts earlier this year describing the rapid deployment of low-cost PV as an unstoppable force, with or without subsidies.

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