SVB Failure Risks Delays in Financing an Important Solar Niche

Some photovoltaic ventures could face delays as developers are forced to find new project finance partners. 

(Bloomberg) — While many climate tech startups may have averted a crisis as the US government  backstops deposits with failed Silicon Valley Bank, one of the institution’s specialties — community solar projects — may still be hit with financing delays. 

The lender is particularly known for helping the sector, leading or participating in 62% of financing US developments, according to SVB’s website. The bank’s large footprint, and the reluctance of other firms to jump in, puts the timeline of future projects at risk as institutions seek out alternative financing.

“Other financiers will step in, but pipelines will be on hold for some time as those new relationships get sorted out,” said Kiran Bhatraju, chief executive officer of Arcadia Power Inc., a Washington, D.C.-based startup that operates a software platform to sign up and manage community solar subscribers.

So-called community solar projects typically allow customers who are unable to install their own systems to buy or lease panels from a larger array. The developments, which tend to be smaller than utility-scale projects, allow a wide variety of individuals, businesses and non-profits to benefit from sun-generated power.

SVB was known for its ability to efficiently manage red tape on smaller renewables projects that bigger firms avoided because the amount of legal and tax work required generates less profit. The bank’s clients include more than 1,550 customers in the climate technology and sustainability sector, and it has committed $3.2 billion to innovation projects in the field.

Read more: Everything We Know About How the US Is Handling the SVB Crisis

“SVB had a big commitment to the climate space,” said Dimitry Gershenson, CEO of Enduring Planet, which funds entrepreneurs in the sector. “It’s up to all of us in the community to step up.”

SVB customers will get all their insured and uninsured fund starting Monday, the Treasury Department, Federal Reserve and Federal Deposit Insurance Corp. said in a joint statement Sunday evening. The announcement eased wider concerns about the potential impact from the bank’s collapse on climate tech.

–With assistance from Todd Woody and Shoko Oda.

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