Will Solyndra news impact the Renewable Energy industry?

The Renewable Energy industry will undoubtedly come under more scrutiny given the headline grabbing news that Solyndra, US poster child for renewable energy, is now bankrupt and under investigation for fraud. News like this will only add to the hurdles that finance managers and CFO’s will face when trying to run or expand their RE businesses. Banks and Private Equity firms are not immune to the whims of the marketplace and may increase their credit underwriting requirements or simply not increase existing lines of credit for fear of another headline grabbing company like Solyndra.

The initiatives for Renewable Energy still exist and the Renewable Portfolio Standards for the power generation industry also remain in place (see chart) which leads to the question: What do CFO’s and finance managers do to increase operating capital and grow their businesses?

One option is to look within their organizations for answers. Companies in this space are required to post financial assurance to guarantee future reclamation and decommissioning of their projects and our research has shown that a great number of companies pledge cash or utilize letters of credit as collateral for these obligations. One alternative to this traditional method is to use surety bonds which enable companies to potentially reduce the amounts they have outstanding on their credit facilities and allow cash used as collateral to be returned to the company thus providing the fuel for growth.

Developing surety capacity to meet the long-term financial assurance requirements of the renewable energy sector is of great interest to us at Smith Manus. For many years we have tailored programs unique to each company we serve, in a variety of industries. Please contact us for more information.

Brook Smith
President
Smith Manus Surety Bonds