Fitch - Solar Power Criteria

Global Infrastructure & Project Finance
Power
Global
Rating Criteria for Solar Power
Sector-Specific Criteria Projects
Utility-Scale Photovoltaic and Concentrating Solar Power
Analysts Scope and Summary

Americas This criteria report applies to a broad range of utility-scale photovoltaic (PV) and
Yvette Dennis concentrating solar power (CSP) plants, including greenfield or existing plants,
+1 212 908-0668
yvette.dennis@fitchratings.com
individual or portfolio assets, fully contracted or merchant sales, and proven or less-
established technologies. Fitch Ratings defines utility-scale projects as freestanding
Cynthia Howells constructions or host-mounted structures that typically rate 10 megawatts (MW) of
+1 212 908-0685
cynthia.howells@fitchratings.com
nameplate capacity or more. These criteria do not consider the additional real estate
risks inherent in solar projects mounted on host structures such as roof access and host
EMEA maintenance. The solar projects discussed in this report are financed as stand-alone
Federico Gronda assets (or portfolios) with no formal guarantee of debt service from the sponsors
+ 39 02 879-0871
federico.gronda@fitchratings.com (nonrecourse). Repayment is dependent upon the cash flows from construction,
operation, and in some cases, hand-over of projects. These rating criteria are intended
David Zolynski for global application. Ratings under these criteria are debt issue ratings and take into
+44 20 3530 1197
david.zolynski@fitchratings.com
account the timeliness of payment, the instrument’s terms, and do not incorporate
recovery prospects given a default.
Asia Pacific
Nandakumar Srinivasan Rating factors specific to solar power projects are identified and broadly grouped into
+91 44 4340-1710 “project analysis” and “financial analysis” factors as described in “Rating Criteria for
s.nandakumar@fitchratings.com
Infrastructure and Project Finance,” the Master Criteria, as revised on Aug. 16, 2010.
Fitch maintains data from numerous private ratings for PV and CSP projects primarily in
Related Research the U.S. through the Department of Energy (DOE) programs, as well as in Canada and
•Solar Photovoltaic Feed-in Tariffs ⎯ Europe. Fitch engaged in discussions with solar industry players including developers,
Stability of Support Frameworks third-party solar resource supply consultants, and third-party engineers for these
Questioned, Feb. 16, 2011 criteria. The criteria is also informed by industry research including performance
•Rating Criteria for Infrastructure evaluations, field studies, and other literature reviews from numerous sources including
and Project Finance, Aug. 16, 2010
•Rating Criteria for Thermal Power
the Doe’s National Renewable Energy Laboratory (NREL), the European Commission,
Projects, June 15, 2010 and the International Energy Agency, among others.
Key Rating Drivers

Major risk factors for solar projects include the following:
Project Analysis
• Financial strength and experience of sponsors, particularly with newer technologies.
• Reliable and accurate third-party reports on scope and quality of a solar resource
and project design.
• Experience and financial strength of construction contractor with similar projects.
• Terms of the construction contracts, and the complexity and time scale of the
construction phase.
• Strength of warranties and/or guarantees for project design, parts, and operations.
• Technology risk associated with the project.
• Strength / weakness of the project cash flow stream.
www.fitchratings.com February 23, 2011

Risk Factor Assessment: Financial Analysis

Sponsors (◊) • Financial structure including amortizing debt characteristics, covenants, and
reserve account mechanisms.
Stronger solar project • Financial metrics, flexibility, and sensitivities.
sponsors have significant
prior experience in the solar These key ratings drivers are developed further in this report (highlighted using the ◊
industry, either in symbol) along with supporting credit risk commentary on other aspects specific to
manufacturing, construction, solar power projects.
or operations.
This report explains how Fitch tailors its general project finance approach in order to
Midrange sponsors include
rate utility size solar projects. It focuses on the fundamental aspects Fitch deems most
newer sponsors to the solar
sector with significant other
critical and relevant to the debt ratings of power plants in this sector. It should be read
power experience that does in conjunction with the Master Criteria, which is available at www.fitchratings.com.
not necessarily include solar
experience. Project Analysis ⎯ Structure and Information
Weaker sponsors reflect no Ownership and Sponsors (◊)
power experience or history, Fitch evaluates the sponsor’s commitment to the project. Sponsors with significant
but may possess industrial or resources, time, and reputation invested in the project, including higher levels of
construction expertise. direct equity investment or guarantees, are considered a stabilizing factor to the
project. This is particularly true in the presence of sponsor covenants to retain
adequate or a minimum capitalization level in the project. Strategic importance of the
project to the sponsor is also considered. For example, the sponsor’s performance on a
Risk Factor Assessment: high profile or innovative solar project may heavily influence its reputation in general.
Third-Party Reports In contrast, three or more owners without a controlling sponsor spearheading the
(◊) project could be considered weaker.
Stronger third-party reports Jurisdiction and Other Legal
are performed by consultants
experienced with the
The legal framework of a solar project can have a direct impact on the project’s
technology, region, and solar financial performance. Regulatory incentives such as feed-in tariffs, green certificates,
industry; and are clear, loan guarantees, as well as tax incentives have been utilized in many jurisdictions to
thorough, and support encourage the development of renewable energy. These regimes carry some risk of
conclusions based on facts or change of law. Fitch does not reflect a change of law in its ratings, but a change in
well-reasoned analyses regulatory incentives may have a significant impact on a project’s rating (please see
rooted in the facts. the Project Analysis ⎯ Revenue Risk, and Project Analysis ⎯ Macro Risks sections for
additional information).
Midrange third-party reports
with some experience with the
Use of Third-Party Reports (◊)
technology, region, and solar The two most important third-party reports for a solar project debt rating are a third-
industry, are clearly written party solar resource supply assessment, and a third-party engineering report. A solar
overall, and include less well- resource supply assessment evaluates the unique profile of solar energy (also called
supported conclusions or insolation or irradiance) available at the specific project site, and estimates the
analysis of the facts. average and probability weighted annual electric energy outputs that could be
generated by the specific proposed solar project (please see the Project Analysis ⎯
Weaker third-party reports
Operation Risk Supply section for more details). A third-party engineering report
with little or no prior evaluates the viability of the design of the solar project, the technology, the budget,
experience with solar the construction timeline, and the long-term operations of the plant for the term of the
projects or the specific debt, among other factors (please see the Project Analysis ⎯ Completion Risk section
technology or lack clarity, for more details). Where these reports contain matters of fact, Fitch will question the
contain extensive caveats, source and reliability. Where the information is a forecast or opinion, Fitch expects
are abbreviated, or were these reports to be based on well-reasoned analysis supported by the facts. Without
conducted under less these two third-party reports, Fitch may choose not to provide a rating.
relevant circumstances.
2 Rating Criteria for Solar Power Projects February 23, 2011

Limitations of Methodology
These criteria outlines Fitch’s approach for evaluating the risks that solar power
projects are generally expected to face, including short-term external shocks and
individual project bankruptcies. It does not cover circumstances such as a significant
change in energy demand, a complete realignment of the energy or electricity sector as
currently structured in individual countries, or the potential impact of climate change.
If one of these or similar events were to occur, Fitch would review the criteria and
make appropriate changes to the methodology and to ratings covered by these criteria.
Project Analysis ⎯ Completion Risk

Risk Factor Assessment:
Construction Contractors Contractors (◊)
(◊) Fitch looks for evidence that contractors have the ability to properly design, equip, and
Stronger projects are led by an construct the proposed project and will look to the opinions of a third-party engineer.
experienced investment-grade Fitch looks favorably on projects led by an engineering, procurement, and construction
contractor, either engineering, (EPC) contractor, which serves as a single point of accountability to deliver a complete
procurement, and construction project on time and in accordance with performance requirements to achieve
(EPC) or owner/constructor commercial operation. Construction for stronger projects will be executed by an EPC
contractor. contractor with direct experience with projects of similar technology and size. However,
Fitch is aware of limited or the absence of commercial application of some solar
Midrange contractors are
experienced and possibly technologies and will consider the EPC contractor’s relevant experience.
investment grade.
Fitch considers the capacity of an EPC contractor to absorb possible cost overruns and to
Weaker projects rely on meet performance guarantees. Fitch views favorably large investment-grade EPC
multiple smaller contractors contractors that have a national or international market presence, long operating
that may be financially weak histories, and strong experience in the power sector including solar. However, smaller,
and have no external support. experienced EPC contractors do not necessarily constrain a project’s rating depending on
the technology’s complexity and whether it is proven. Fitch will also review whether the
project has financial resources available to support a change in contractor if needed. In
investment-grade projects, contractors will have reliable sources of sufficient liquidity
and provide adequate performance guarantees. Fitch will look to liquidity dedicated to
the project such as letters of credit and bonding to cover delay and performance
penalties. A strong corporate parent may provide an irrevocable, unconditional guarantee
of the EPC contractor’s obligations and liabilities, which can mitigate Fitch’s concerns of
a capable contractor whose market presence is relatively recent.
Manufacturers
Utility-scale solar power generation is a nascent sector with a proliferation of
equipment manufacturers of relatively modest experience whose market presence may
or may not endure. As such, Fitch views very few equipment manufacturers as
investment-grade credit quality, making satisfactory completion less certain. Without
an established history of successful manufacturer performance, projects will face
greater stress in Fitch’s financial analysis. Whether a manufacturer constrains a
project’s rating is dependent upon whether the technology is proven; the complexity of
the project; the manufacturer’s direct experience with the proposed technology;
reliability for timely equipment delivery; ease of manufacturer and parts replacement
in case the manufacturer proves to be unreliable; and financial resources available to
the project to support a change in manufacturer, if necessary.
Construction Contract Terms

In reviewing the adequacy of construction contract terms, Fitch examines the
responsibilities of contractors and project sponsors, the schedule for achieving
commercial operation, performance requirements and guarantees, and liquidated
damages (LD) for failure to perform by any party.
Rating Criteria for Solar Power Projects February 23, 2011 3

Stronger contracts will include an obligation of an EPC contractor to design and

construct the project under a fixed price, date certain, and turnkey agreement. Fitch
will review the terms for the EPC contractor to conduct engineering, procurement,
construction, commissioning, and start-up. In accordance with the Master Criteria,
project sponsors will demonstrate that they have obtained all necessary rights for
property access and construction permits and achieve compliance with environmental
and other regulatory requirements. Given the large amounts of land obtained for some
solar power projects, environmental issues may arise regarding the potential
displacement of wildlife. In addition, some CSP projects have a need for vast amounts
of water for cooling in areas that may have strong solar irradiation but scarce water
resources. Therefore, proper permitting is key to project completion.
Demonstration of adequate transmission access including needed additions and
upgrades, especially for projects that do not operate in close proximity to the load-
serving area should also be addressed. An arrangement may exist where the project
pays upfront for needed transmission that will be owned by a utility off-taker in which
the utility reimburses the project for the capital expenditure. This ensures that
transmission development occurs along side the project’s construction, mitigating the
potential for delays in project completion.
Informed by the third-party engineer’s report, Fitch will assess the reasonableness of
the construction and permitting schedule to achieve commercial operation, including a
sufficient buffer in the event of delays. While permitting can last up to 18 months,
smaller utility-scale PV plants can be built within six months. However, Fitch believes
that it is important not to underestimate the potential for delays. Delays due to
equipment delivery, permitting, improper ground mounting, and inclement weather are
just a few examples that could disrupt a PV project. For CSP plants, the completion
schedule can be similar to a fossil fuel plant with a regulatory and permitting process
that may last longer than PV with a construction phase lasting between 24 and 30
months.
In stronger projects, the risk of power purchase agreement (PPA) termination due to
delays is low but the project may still incur LDs. In well-structured contracts, LDs
payable by the contractor fully cover financial penalties due to the utility off-taker as
well as debt service obligations if the project is not delivered on time. Fitch considers
the quality of the source of liquidity and whether it is dedicated to the project or must
compete with other contractor obligations. As such, high-quality bonding and letters of
credit dedicated to the project are considered stronger than relying on the contractor’s
balance sheet for liquidity. Equally important, Fitch will consider the potential for
disputes to impede timely and adequate payment of delay damages.
Upon review of the third-party engineering report, Fitch will assess the adequacy of
tests to demonstrate the performance of the facility in accordance with design
standards and the requirements of the off-take agreement to achieve commercial
operation. Performance tests include but are not limited to start-up reliability,
continuous hours of operation, as well as proper functioning of solar tracking
equipment and inverters. Performance LDs will also be assessed based upon the quality
of the payment source, as well as the potential for timely and adequate payment. Fitch
will also refer to third-party engineering assessments of international or national
certification, safety, reliability, and accelerated life testing.
Equipment warranties, electric output guarantees, and third-party
insurance/guarantees demonstrate manufacturers’ and third parties’ willingness to
stand behind the performance of solar equipment, which are only as strong as the
entities behind them. As such, Fitch’s assessment of the value of these warranties is

based upon three factors: the terms of performance coverage (including limitations),
Risk Factor Assessment: the duration of the warranty/guarantee, and the quality of the provider. (◊)
Warranty Providers (◊)
Stronger warranty providers are Traditional manufacturer performance guarantees for PV projects include up to a five-
investment-grade year warranty for solar panel defects, and a power output warranty of 90% of initial
manufacturers that have a long nominal power in the first 10 years and 80% for the full 20 to 25 years. Some of these
history of generally stable warranties are limited by conditions such as guaranteeing output by plus or minus 5%,
operating and financial which Fitch would consider in its financial analysis. Fitch recognizes that PV warranties
performance. While they have are evolving. Future warranties could provide guarantees for degradation on a periodic
strong knowledge of the solar basis such as five-year increments or on an annual basis, which would increase
power sector, they are
conglomerates that are not
manufacturer accountability for specified levels of performance. Inverters are
dependent on nascent sectors warranted for at least five years with an option to extend for 10 years, reflecting
and have national or industry advances in inverter performance. In a few instances, Fitch has observed long-
international market term output warranties based upon a maximum guaranteed degradation rate for
penetration. concentrating PV. For CSP, Fitch has observed that there are various technical
performance guarantees, which currently range from 24 to 36 months.
Midrange providers are
investment-grade The financial analysis in Fitch’s rating case will reflect the performance and duration of
manufacturers concentrated in guarantees of investment-grade counterparties, mitigating the amount of stress in
the solar manufacturing market Fitch’s financial analysis. Warranties from weaker manufacturers will have less weight
or experienced conglomerates in the financial analysis unless backed by strong third-party enhancement. A highly
near investment grade with a rated third-party counterparty such as an insurance provider may back up the
solid financial position to fulfill
guarantees.
performance guarantees of experienced manufacturers. In addition to the credit quality
of the third party, the value of the guarantee in the project rating will depend on what
Weaker warranty providers the third party will guarantee and for how long. Third-party support may come with
include experienced but below limitations that do not match the manufacturer’s warranty. In such cases, Fitch
investment-grade entities or considers the value of what the third-party insurer will cover and considers all other
newer manufacturers with performance areas as exposed to the risk of the manufacturer and technology.
questionable performance,
longevity, and financial Construction Technology Risk
strength. Technology risk in project completion is in Fitch’s view based upon the proven status of
the technology, construction complexity, and scale-up risk. Due to its modularity and
few moving parts, solar PV plant construction is simple and low risk compared with
other forms of power generation. Panels are mounted onto steel support structures on a
flat angle, fixed tilt, or in a tracking position. Installation of panels and structural
support is identical from row to row reducing complexity. While the use of tracking is
more complex, it is still considered to be proven. The inverter converts the panels’
direct current (DC) electricity to alternating current (AC) electricity to match the
distribution grid. Scale-up risk is mitigated by the modular nature of plant assembly.
CSP construction is more complex, carrying greater risk as it is composed of a solar
collection field, power block, and in some cases, thermal storage capability. Part of
CSP construction is modular, as a solar collection field is installed. The remaining
construction is similar to a traditional fossil fuel plant, which includes installation of a
steam generator, steam turbine, condenser, cooling towers, and plant control systems.
CSP scale-up risks may center on the increasing area of the solar collection field and
the solar receiver but generally scale-up risk can be mitigated with multiple rather than
larger solar receivers. Fitch will engage with the third-party engineer regarding how
effective the project’s design can mitigate scale-up risks.

Indicative Construction Terms for Investment-Grade Ratings

Contractors EPC contractor with direct experience completing similar size and
technology projects; usually investment-grade rating; availability
of potential replacement contractors; direct participation of
equipment manufacturer; manufacturer has experience with the
technology and a history of completed projects; favorable third-
party engineer opinion regarding contractors’ ability to properly
design, equip, and construct the project.
Contract Type Fixed-price or limited cost-based contract; adequate cost overrun
contingencies, completion guarantees and liquidated damages
provisions; performance guarantees assuring compliance with
off-take agreement and design specifications; substantial price
certainty through fixed prices and detailed design; favorable
third-party engineer opinion regarding adequacy of budget,
schedule, and project performance requirements; construction
monitoring and reporting by third party engineer.
Liquidated Damages (LD), Bonding and LDs sufficient to cover project’s delay penalties and fixed costs
Performance Guarantees including debt service for at least three months; performance
LDs sufficient to offset cash flow reduction due to failure to
meet guaranteed performance levels or achievement of lower
than expected tariff due to late commissioning; performance
bonds for a significant percentage of the value of the EPC
contract if contractor is below investment grade.
Performance Tests Performed to international engineering standards as confirmed by
the third-party engineer; tests are structured to demonstrate
the performance of the facility to design standards, meet off-
take agreement requirements; and meet guaranteed levels of
capacity, availability and electric energy output.
Warranties: Manufacturer Traditional industry warranties for PV regarding serial defects and
long-term output; technical performance warranties for major
components of 24−36 months for CSP; preferably investment-
grade manufacturers with financial capacity to honor longer-
term warranties.
Warranties: EPC Contractor Completed project performance warranted through final
completion; preferably investment-grade contractor or
bonding, or strong parent guarantee sufficient to meet
warranty obligations.
EPC − Engineering, procurement, and construction. PV − Photovoltaic. CSP − Concentrating solar power.
Source: Fitch.
Risk Factor Assessment: Project Analysis ⎯ Operation Risk

Operator (◊)
Operator (◊)
Stronger solar project
Fitch looks for an experienced operator with the same type of technology, in the same
operators are investment-
grade, leading solar country or region, to manage the day-to-day monitoring and maintenance and longer
technology manufacturers or term overhaul of the plant. Operators should have adequate resources and relevant
large conglomerates with qualified staff to execute operational tasks, as demonstrated by balance sheet strength
demonstrated operating and operating track record. Operator performance-based bonuses and incentives are
success in the solar industry considered a credit positive as an indication that the plant could operate above
and the region, and are often minimum thresholds dictated in the PPA or other operating agreements. Fitch also
affiliates of the sponsor. relies on the third-party engineer’s evaluation to assess the operator’s performance
risks, especially for smaller, lesser known operators or operators who are untested in
Midrange solar project
the solar industry.
operators have experience
with the technology or have Fitch has observed that operators in the solar power project sector are often affiliates of
extensive experience
the sponsor, EPC contractor, or equipment manufacturer. The reputational importance
operating nonsolar power
projects.
for the operator of a high-profile project, either in respect of technology, scale, or
national prestige, is unlikely to benefit the rating in isolation.
Weaker solar project
operators have little to no Operating Costs (◊)
experience with the solar Operating costs are determined by the solar technology employed, PV or CSP, and the
technology or in the power type of contract signed with the operator, either fixed price, a management fee with
industry. out-of-pocket cost reimbursements, cost-plus, or some other arrangement. Timing of
solar plant maintenance costs is annual, while overhaul costs are typically periodic.

Fitch expects a third-party engineering report to assess the make up and timing of solar
Risk Factor Assessment: project operating costs.
Operating Contracts
(◊) Fixed-price operating contracts that include overhaul costs and lack a pass-through of
Stronger O&M contracts for out-of-pocket charges are the most favorable to solar projects due to the lack of cost
solar projects include fixed- volatility. If the operating contract is not an all-in fixed-price contract, Fitch looks for a
price agreements with the major maintenance reserve to cover the cost of inverter or turbine overhauls, as well as
operator that include panel or heliostat replacements, on a regular cycle. An O&M reserve would also reduce
overhaul costs and exclude volatility by providing flexibility to cover incidental higher costs of cleaning, monitoring,
reimbursement of out-of and maintaining the plant on an annual basis. Fitch finds these measures favorable
pocket expenses, effectively mitigants to rising or unplanned costs. Inflation-based contracts, cost-plus contracts,
transferring operating cost
and other similar arrangements will be evaluated for their effects on cash flows. Bonus
risk to the operator.
incentives are considered a useful tool to keep the operator focused on optimal
Midrange operating contracts performance within existing costs.
reflect a fixed or escalating
management fee plus out-of-
Affiliate-operator agreements that appear underpriced are considered a credit negative
pocket reimbursements, based on the possibility, not the expectation, that an affiliate-operator could be
performance incentives, and replaced with a higher cost third-party operator in the future. Fitch would address this
an accrual reserve for major risk by adding additional stress to the operating contract to test the level of higher
maintenance prior to the costs that could be borne by the project, and will use stresses that are consistent with
expense. the rating of the affiliate-operator. Both incentives and possible conflicts are
considered with respect to an affiliate-operator. However, the key rating issue remains
Weaker operating contracts the alignment of operator’s interest with the rated debt holders.
include cost-plus fees and out-
of-pocket reimbursements and Major costs of PV projects are expected to be lower than for a typical power project
lack performance incentives. due to the solid state nature of PV technology with no moving parts. Costs unique to PV
projects include inverter repair or replacement, and PV panel replacement due to
defect or breakage. Overhaul costs for inverters can range from every five to 10 years.
Major costs for CSP projects are expected to be higher than PV costs, more in line with
a typical thermal power project, due to their complexity and various moving parts.
Costs that are distinct for CSP plants compared with PV plants include turbine overhaul
(much like a traditional thermal power plant), input water costs for running and cooling
the turbines, regular replacement of the heat transfer fluid to maintain maximum
conductivity, thermal storage piping, and/or tank replacement due to salt corrosion,
harmonization and calibration of tracking systems, and mirror replacement primarily
due to wind breakage. Cleaning of heliostats is another unique cost to CSP plants,
however, these costs are usually fairly small in the overall plant budget. Fitch also
expects CSP turbines to be overhauled periodically based on usage and third-party
engineering assessments.
A unique operating cost risk that affects both PV and CSP relates to replacement parts.
As part of a nascent solar energy sector, manufacturers may not remain in business to
provide needed parts over the long term. In other cases, technological advances may
render existing equipment obsolete. The ability and the cost to replace needed parts
could be substantially different than originally budgeted. As a result, an assessment
from the third-party engineer on budgeting for proprietary parts or parts needed in
evolving technologies in O&M and major maintenance adds strength to the risk
evaluation. Verifiable ability to substitute parts or the technology’s ability to achieve
commodity-like availability would be considered stronger. If the operator relies on
replacement parts from a weaker manufacturer, then the rating may be constrained to
the rating of the weaker manufacturer.
With limited operating experience for solar plants in contrast to the terms of the debt,
Fitch’s analysis will include additional O&M stress to PV plants after year 15, as well as
to availability. Fitch applies these additional later-year operating stresses to PV plants

only based on the view that O&M stresses for CSP are analogous to O&M stresses for
traditional thermal power plants, which reflect changes in the balance of plant. This
criteria report bases the O&M stresses for CSP on Fitch’s existing “Rating Criteria for
Thermal Power Projects,” June 15, 2010 (thermal criteria), which does not currently
apply additional O&M stress in the out years.
Supply
Sunlight is an intermittent renewable fuel source. Similar to other renewable energy
sources, it is not available on demand and its quantity can vary on a daily basis.
Therefore, Fitch expects that each utility-sized solar project will have a third-party
assessment of the variability of solar resource for the particular project site in order to
better quantify the fuel supply. The specific solar irradiance at the project site will be
the basis for the project’s expected electric energy output, measured in megawatt-hours
(MWh), and also the basis for the project’s expected cash flow to meet debt obligations.
Fitch looks to a third-party solar resource supply assessment to address three major
issues: (1) the quality of the data used to determine the characteristics of the solar
resource; (2) a long-term estimate of the average electric energy output from the
project, based on the solar resource evaluation and the design of the project; and (3)
various statistical probability scenarios of the expected electric energy output.
Types of Solar Energy and Measurement Instruments

There are four main forms of solar energy or irradiance that should be evaluated in a
solar resource assessment. Photovoltaic solar projects can use all forms of solar
energy, direct and indirect, while CSP projects are designed to use direct solar energy
only. All four forms of solar energy are measured in watts per meters squared (W/m2).
• Direct normal irradiation (DNI or direct radiation) is the incident solar

radiation in a direct line from the sun, without having been reflected or
scattered. DNI is the primary measure of a solar resource for CSP projects.
• Diffuse horizontal irradiation (DHI or diffuse radiation) is the incident solar
radiation that has been scattered by clouds (droplets of water), dust,
pollution in the air, etc. This measure of sunlight cannot be used by CSP
projects, but is important for PV projects.
• Albedo (reflected radiation) is incident solar radiation reflected from the
ground, roof, or topography. Albedo is also of little use for CSP projects, but
is a component of the supply for PV projects.
• Global horizontal irradiation (GHI or global radiation) is the sum of all the
three radiation sources described above, DNI, DHI, and Albedo. It is the
primary measure of a solar resource for PV projects.
Readings of the various types of solar radiation are collected using specific
instruments. Pyroheliometers are used to measure DNI specifically, and pyranometers
are used to measure GHI, which includes all forms of solar irradiance. A rotating
shadowband radiometer is a specific pyanometer that can measure all irradiance
types as well as atmospheric parameters.
Resource Data Quality (◊)

Fitch looks to the solar resource consultant to evaluate the available solar irradiance
data as it relates to the actual project site, and to opine on the quality of the data. A
valid data set includes: readings of the applicable solar irradiance (also called solar
energy or insolation), ambient temperature, wind speed, and precipitation at the
project site on an hourly time scale.

Fitch looks for a minimum of one year, hourly, well-maintained, onsite data for a
Risk Factor Assessment: complete solar resource supply assessment. Shorter data periods than one year will not
Solar Data Sets (◊) capture the full seasonal and diurnal characteristics of solar irradiance at a particular
Most solar data sets Fitch site, and would be considered either midrange or weaker. Confirmation that the
reviews are likely to have instruments used to collect the data were appropriate and properly calibrated and
midrange attributes that maintained is also expected. Fitch has encountered instances in which no onsite, local,
reflect one year or more of or regional solar data is available, and the solar resource consultant had to rely solely
well-maintained, hourly on satellite data to evaluate solar irradiance. While not ideal, Fitch realizes the data
ground-based data within a
constraints, and accepts this weaker data when no other appropriate sources exist.
10-mile radius of the project
site (not onsite). Fitch expects the solar resource consultant to include or recommend a reduction to the
solar resource for the additional bias inherent in a weaker data set.
Stronger solar data sets
reflect actual onsite, 30- A comparison of the project’s solar data to other local or regional data sources is
minute interval or hourly crucial to evaluating overall data quality. Fitch looks for information on each reference
data for one year or more, station’s period of record, elevation, and distance from the project site to validate this
from well-maintained comparison. A high correlation of the project’s data set to the reference station’s data
instruments. set would help to confirm its profile and general accuracy, and would be considered
stronger. A low correlation to a local or regional data, or to a data set far removed
Weaker solar data sets are from the project site, would be considered a weaker data set. Fitch looks for
likely to be exclusively from explanation of any adjustments used by the solar consultant to construct a final data
hourly satellite data without
set of the highest quality given the existing data constraints. The evaluation of the
appropriate adjustments for
data quality and the applied solar data will yield average solar and meteorological resource characteristics for a
technology. particular type of insolation (global horizontal irradiation [GHI] for PV, or direct normal
irradiation [DNI] for CSP) calculated in kilowatt-hours per meters squared (kWh/m2)
either per day or per year.
Finally, Fitch expects the solar resource consultant to create a long-term data set for
the project site using the specific site data (discussed above) and an external, long-
dated “typical meteorological year” (TMY) data. TMY data sets are time series data,
modeled from satellite data, and are adjusted to exclude anomalous events such as
volcanic eruptions. Fitch expects the resource consultant to use a reputable long-dated
TMY data set, and to disclose the source.
Risk Factor Assessment: Electric Output Estimate

Electric Output
Estimates (◊) A solar project’s electric output Indicative Loss Factors due to
estimate is the net, long-term Technologya
Electric output estimates average electric generation,
that present all loss
calculated in MWh, attributed to the Concentrating Solar Power Photovoltaic
categories with a percentage
reduction used are viewed as project. The electric output estimate Solar Field Heat Losses
Tracking Error
Shading
Glass Reflection/Absorption
stronger. will take into account the solar Geometric Accuracy Nonstandard Test Conditions
Mirror Reflectivity Soiling
resource, the solar technology Shading Module Mismatch
Electric output estimates employed by the project, and Solar Transmittance Direct Current Wiring
Solar Absorbance Inverter efficiency
that present some loss expected losses for the technology Mirror Soiling Inverter limitation
categories with the and its operations that will reduce Receiver Thermal Losses Alternate Current Cooling
Lost Receiver Vacuum Parasitic Load
percentage reduction the electric output. Electric output Thermal Storage Losses Transformer
employed in the estimate are estimates that present expected loss Parasitic Load Alternate Current Wiring
considered midrange. Turbine Efficiency
categories, with the percentage aAdditional loss factors may apply, not an all inclusive listing.
Electric output estimates reduction used to produce MWh Source: Fitch.
that do not specify any output, and a confidence interval for
percentage of losses or that each loss category, are also viewed
do not address sufficient loss as stronger. Please see the chart at right for typical losses associated with solar
factors are considered technologies. Operational losses include reductions to the plant’s expected availability,
weaker. reductions to expected annual degradation (applied to PV plants), and possible
transmission curtailment, if any. Finally, Fitch takes an additional reduction to the

electric output estimate for solar resource bias, in order to address endemic
measurement irregularities in the data set. Fitch will look to the solar resource supply
consultant, and Fitch experience, for the appropriate bias error estimate.
Fitch also reviews a metric that is unique to PV plants called the performance ratio, or
PR, in relation to the electric output estimate. The performance ratio is a descriptive
statistic, expressed as a percentage that estimates overall energy yield, i.e. the energy
output after losses within the PV system relative to the system’s nominal output. The
performance ratio is calculated as AC MWh output per the DC MW nameplate rating
divided by the plane of array (POA) insolation in MWhs per meter squared, or (AC
MWh/DC MW) / (POA MWh/m2). The performance ratio measures the project’s energy
yield based on factors such as inverter efficiency, wiring, module mismatch,
degradation, module temperature effects, and other system loss factors discussed
above. Fitch regards the performance ratio as a useful data point in its analysis of a PV
plant, but it is not a rating factor.
Finally, Fitch will expect the solar resource consultant to disclose the source of the
computer model used to forecast electric output, and to discuss the suitability of the model.
Resource consultants typically use an industry accepted model that Fitch views as stronger.
In some cases, a solar resource consultant may be asked to use and evaluate output from a
proprietary model developed by the sponsor or technology manufacturer. In this
circumstance, Fitch looks to the third-party resource consultant to indentify the model
developer and justify the use of an affiliate’s model as a substitute.
Output Probability Scenarios

Similar to its criteria on wind projects, Fitch looks to probability scenarios to qualify
the intermittent resource by providing an estimate of electric output that the solar
resource consultant expects to be exceeded over a certain period of time with 50%
confidence (P50), 90% confidence (P90), and 99% (P99) confidence. The probability
scenario provides a theoretical floor output level based on a probability and time span.
Fitch considers a solar resource assessment that provides three output probability
scenarios, a P50, a one-year P90, and a one-year P99, to be stronger.
• A P50 output profile is the long-term annual average output that has a 50%
probability of being exceeded over the term of the debt. A P50 output profile will
also, by definition, have a 50% probability of falling short of this level of output.
This energy production level represents the solar resource consultant’s best
estimate of the average annual electric yield achievable by the project. Fitch uses
the P50 to formulate its base case electric output for a solar plant.
• A one-year P90 is defined as the output level that has a 90% probability of being
exceeded in any given year over the life of the debt, and will provide a smaller
expected output level than a P50. The one-year P90 will also have a 10% probability
of falling short of this output level in any given year over the life of the debt. Fitch
will use a one-year P90 output profile in its rating determination for the debt issue.
Please see Financial Analysis ⎯ Debt Service section for further discussion of
Fitch’s financial cases.
• A one-year P99 output profile will be the lowest output profile, and therefore, the
most conservative. A P99 is the output level that has a 99% probability of being
exceeded in any given year, and a 1% probability of falling short in any given year
over the term of the debt. Fitch uses the one-year P99 as a stress case for rating a
solar project.
A midrange solar resource assessment will provide a P50 and a P90 only, and a weaker
solar resource assessment will provide only a P50 or will not categorize its output as

one of these three basic probability scenarios. Fitch may choose not to rate a solar debt
issue that provides a P50 alone.
Transmission Supply
A final supply issue is transmission availability. Fitch looks for a discussion of the
amount of transmission that either exists or expects to be built in conjunction with the
solar project, and a determination if the transmission plan is sufficient or in excess of
the maximum output of the solar project. Part of the permitting for greenfield utility-
scale solar projects often includes an interconnection agreement with the grid manager
and/or direct off-taker of the project, and Fitch expects to examine this agreement for
sufficiency, timeliness, and appropriate rights of way. Fitch also looks to the solar
resource consultant to opine on this agreement. Any history of curtailment by the grid
manager or off-taker, or congestion issues that could lead to possible unplanned
curtailment, lower plant performance, or operational issues should be considered in
transmission supply. Rooftop-mounted distributed generation systems are not
dependent on transmission availability and would not face transmission supply
limitations.
Solar Technology (◊) Technology (◊)
Solar technologies that have Fitch evaluates solar technology based on its long-term ability to provide electric output
a substantial and proven and revenues to service debt. Fitch’s major concerns surround the technology’s
track record are considered complexity, commercial viability, performance uncertainty, and utility-scale applicability.
to have less performance
uncertainty and therefore There are two classes of solar projects: PV and CSP. The primary difference between
stronger performance the two technologies is how they use the sun’s rays to generate electricity. In a PV
attributes. These plant, sunlight is converted directly into electricity through the acceleration of
technologies include electrons in a semiconductor material that is embedded in the solar cell that creates an
crystalline silicon PV and electrical current. In a CSP plant, the sun’s heat is concentrated by mirrors or lenses
parabolic trough CSP
onto a working fluid, such as a hydrocarbon fluid, which heats water into steam and
projects.
turns a conventional steam turbine. Please see the table below for a basic comparison
Solar technologies that have of the two solar technologies.
limited but actual operating
history at the utility scale are Photovoltaic (PV)
considered to have midrange Currently there are three primary variations of PV technologies: crystalline silicon, thin
performance uncertainty. film, and concentrating PV. Fitch attributes crystalline silicon (c-Si) panels, including
These technologies include monocrystalline and polycrystalline, a lower cost and performance uncertainty
some thin film PV from a few compared with other PV technologies based on approximately 30 years of operating
strong manufacturers and history, mostly as a residential and distributed power source and with minimal scale-up
power tower CPS projects.
risk due to their modularity. Thin film panel technologies, including amorphous silicon
Solar technologies that are (a-Si), cadmium telluride (CdTe), and copper indium (gallium) diselenide (CIGS and CIS),
currently emerging, in are attributed midrange cost and performance uncertainty because some of these
development, or in the pilot technologies have a limited operating history of up to five years at the utility scale.
phase, with no actual utility- Finally, concentrating PV (CPV) technologies are currently emerging in the solar power
scale operating history are industry, and therefore entail relatively higher uncertainty in projecting lifetime costs
considered to have higher and performance. Please see Appendix B for a discussion of the current PV technologies.
performance uncertainty and
therefore weaker Concentrating Solar Power (CSP)
performance attributes. Currently, there are four primary variations of CSP technologies: parabolic troughs,
Currently these technologies
power towers, solar dish-engines, and linear Fresnel reflectors. Parabolic trough
include some thin film PV,
concentrating PV, dish-
technologies are the oldest CSP technology, dating back to the mid-1980s as a utility-
engine CSP, and linear scale electricity source, and Fitch attributes the technology relatively low cost and
Fresnel reflector CSP performance uncertainty. Power tower technologies have been available at the utility
projects. scale since the late 2000s, and due to their more recent utility-scale experience, Fitch
attributes power towers a midrange cost and performance uncertainty. Dish-engine and

linear Fresnel reflector technologies are attributed relatively higher cost and
performance uncertainty due to their status as technologies are currently in
development. Please see Appendix B for a discussion of the current CSP technologies.
General Comparison of Solar Technologies

Feature Photovoltaic Concentrating Solar Power
Applicable Sunlight Global horizontal insolation (GHI) Direct normal insolation (DNI)
Climates Suited All climates Hot climates only
Solar Resource Intensity Any intensity permissible 2600 kWh/m2/year or > required
Storage Possible No Yes
Sunlight Collector PV cell Mirror or heliostat
Semiconductor (PV) or Silicon, amorphous silicon, cadmium Hydrocarbon fluid, synthetic oil,
Conductor (CSP) telluride, others hydrogen, helium, molten dalt
Turbine Required No Yes
No tracking, single-axis tracking, or Required to have single-axis or dual-
Axis Tracking
dual-axis tracking observed axis tracking
Tilt Fixed or adjusting Adjusting required
Concentration Ratio None for PV, up to 500 times for 30 to 1,500 times
concentrating PV
Water Cooling Needs None Maximum 500 to 800 gallons per MWh
Current Produced Direct current (DC) Alternating current (AC)
Dispatchability (without Storage) None None
Conversion Efficiency (%) 6.5% to 19.0% PV, up to 30% for 15.0% to 30.0%
concentrating PV
Max Capacity Factor (%) 24.0% (no tracking) 33.0% (with dual- 25.0% (without storage) 40.0% (with
axis tracking) 6 hours storage)
Plant Complexity Low High
M2 − Meters squared.
Source: Fitch.
Risk Factor Assessment: Project Analysis ⎯ Revenue Risk (◊)

Revenue Risk (◊) Solar power projects are not independently economically viable in a competitive energy
With stronger off-take market. Currently, their success is predicated on revenue stability through long-term
agreements, there is no PPAs as well as feed-in tariffs (FITs), subsidy payments, and other supporting regulatory
merchant market exposure and frameworks. Revenue resources for both PV and CSP projects are likely to be from
debt will mature before the electricity deliveries rather than capacity and ancillary services. Revenues are netted
revenue contract terminates. against projects’ operating costs (discussed in the Project Analysis ⎯ Operation Risk
section) to determine the financial margin available for debt repayment.
Midrange revenue contracts
have a duration that matches PPAs
the term of the rated debt and
are within the useful life of the
The credit quality of the power off-taker serves as a cap on the project rating since the
assets or have merchant reliability of revenue payment is based on the purchasing entity. A typical project will
exposure that covers a small have a PPA with investment-grade off-takers (e.g. government entities, regional power
portion of debt for a project market operators, and utilities.) As a below investment-grade off-taker will cap the
that is price competitive under project rating, Fitch will assess the off-taker’s financial performance and the strategic
Fitch’s power price stress importance of the solar power project in fulfilling renewable energy mandates.
scenarios.
While strong solar power projects typically have a secure revenue stream through long-
Weaker revenue generating term contracts, some exposure to merchant market power prices does not necessarily
structures leave a meaningful preclude a project from achieving an investment-grade rating. In the case that a
portion of debt repayment project has meaningful exposure to the merchant power market, Fitch will apply
subject to merchant market financial stresses to determine the project’s regional competitiveness in a low power
prices.
price merchant market environment and its prospects for timely debt repayment.
Fitch reviews the PPA to determine how stringent power plant performance requirements
are to receive projected payments and to avoid PPA termination. Some PPAs have a simple
requirement that the utility off-taker purchase whatever electric energy output the project

produces. Other PPAs have more stringent requirements that the project has to achieve
minimal performance thresholds regarding the plant’s availability and capacity factors and
total electric energy output. Fitch will stress the projected cash flow to determine the
project’s capacity to meet PPA performance requirements.
Regulatory Incentives
Countries where solar power, and specifically PV, has been most prevalent have been
those providing effective and efficient incentive/support systems. Although these may
come in various forms such as premiums and quota obligations/green certificates, FITs
have been the most widely used.
FITs are established compensation rates for delivered electric output under contracts
generally ranging from 10 years to 25 years. In some countries, the tariff is indexed to
inflation while in others it is fixed for its entire term. FITs have been adopted
throughout Europe and sporadically elsewhere. As is the case for any industry relying on
government subsidies, the financial performance of solar projects is dependent on such
regulations not being modified within the time frame of the financing. Fitch cautions
that even in countries with strong credit ratings (‘AAA’/‘AA’), the threat to subsidy
stability and longevity exists. Financial pressures and competing national priorities may
force countries to reexamine the amount of subsidies they provide and the pace of
their commitments to develop renewable energy projects. Declining costs of solar
equipment may also drive a reduction in the amount of government subsidies that
countries provide. Fitch recognizes the potential tension between meeting aggressive
renewable energy mandates and sustaining costly subsidies to achieve those mandates.
To this extent, Fitch reviews the relevant regulatory frameworks, also paying attention
to whether the interests of incumbent operators have been preserved in the past when
new laws have been enacted. A change in the regulatory regime that reduces a
project’s subsidy support during the life of the debt will trigger Fitch’s reevaluation of
the project’s credit quality.
In Fitch’s financial analysis, renewable energy credits (REC) and green certificates are
considered in accordance with their market prevalence. In Fitch’s experience, RECs
tend to be a minute part of a project’s revenue composition in the U.S., so Fitch
generally excludes their contribution, unless they are contracted, in the financial stress
scenarios to assess the project’s reliance on a subsidy that is not well-established. In
other countries where green certificates have a longer history and are more significant,
Fitch will stress their variability in its financial analysis.
Project Analysis ⎯ Macro Risks

Consistent with the Master Criteria, Fitch’s macro risk analysis for solar power projects
considers sovereign and political risk as well as the regulatory environment. Fitch will
look for signs that renewable power generation is a national priority as indicated by
mandates, such as renewable portfolio standards in the U.S., to achieve renewable
energy goals or national strategic plans and directives.
Macro risks are out of the control of project sponsors as there are limited actions they
can take to mitigate political, economic, and regulatory risks. Therefore, Fitch’s
sovereign rating and country ceiling usually place an upper limit on a project rating.
Fitch’s macro risk assessment considers whether a country has a reliable legal system,
supportive regulatory regime, and long-term economic stability. Macro risks are given
strong consideration in Fitch’s project ratings because even projects with solid
operating potential can be undermined by these factors. Please refer to Fitch’s Master
Criteria for further discussion.

Financial Analysis ⎯ Debt Structure

As with any power project financing, Fitch considers each rated debt instrument’s
individual characteristics, structural features, security rights, and other terms and
conditions. While each debt issue is unique, Fitch looks for debt characteristics and terms
at solar power projects that are overall typical and customary for the power industry.
Debt Characteristics and Terms

Fitch will focus on the characteristics of the debt instrument, including maturity, amount,
and currency. The amortization profile can be a key characteristic of a solar debt issue that
can range from fully amortizing (mortgage style, front-loaded, or back-loaded), balloon, or
bullet repayments. The agency views fully amortizing, front-loaded debt as stronger if it
relies on cash flow during a plant’s most productive years, and back-loaded debt as weaker
if it relies on higher cash flow during a plant’s declining productive years. In addition, Fitch
considers debt maturities that are beyond the current industry average or that are not
commensurate with the economic and commonly accepted life for the relevant technology
to be weaker. As such, no credit is given to cash flows beyond the expected useful life
of the project. Fitch will examine the structure of the debt at a PV plant in consideration
of the expected degradation, in particular. The agency also looks at the priority of payment
tranches (structural seniority or subordination positions) as well as principal and/or interest
deferral features. Please refer to the Master Criteria for more detail.
Structural Features
The structural features of a solar debt issue can have a significant impact on its rating.
Solar debt issues that include a debt service reserve (principal and interest) of at least
six months are considered midrange, while 12 months debt service is considered
stronger. Additional reserves including an operating expense reserve of greater than six
months, accrual of a major maintenance reserve prior to the expenditure, and accrual
of a decommissioning reserve over the life of the plant are each considered stronger.
Cash sweep mechanisms and prohibitions on additional debt are also positive structural
features for the project rating. Fitch will examine exposure to interest rate volatility,
inflation, or currency risk; ownership restrictions; distribution triggers and levels;
liquidity; and payment waterfalls.
Financial Analysis ⎯ Debt Service

Consistent with the Master Criteria, Fitch develops base case, rating case and individual
financial stress scenarios to assess cash flow resiliency and capacity for debt repayment.
Fitch’s analysis starts with a cash flow-based financial model provided by the sponsor,
where performance variables can be manipulated to assess the project’s performance
under stress scenarios. The scenarios outlined below reflect Fitch’s indicative financial
analysis scenarios. While the scenarios reflect Fitch’s typical approach in financial
analysis, Fitch may apply more or less stress to key performance variables to
adequately reflect distinct characteristics of each project with respect to technology,
manufacturer, construction contractor, operator, warranties, and plant location. In
addition, Fitch takes into consideration the reasonableness of the sponsor’s base case
projections, recognizing that some budget estimates are more conservative while
others are more optimistic. Based upon the third-party engineer’s opinion and peer
comparisons of other Fitch-rated projects, Fitch will adjust stress scenarios accordingly.
Key performance variables include electric energy output estimate (expressed in MWh
and calculated on the basis of P50, a one-year P90, and a one-year P99), plant
availability, capacity factor, degradation, and operations and maintenance expenses
(including major maintenance).

Indicative Solar Project ‘BBB’ Category Cover Ratios

DSCR Average Profile (x)
Technology Revenue Contract Type Base Case Rating Case
PV Fully Contracted 1.40 and above 1.30 and above
Partially Contracted 1.60 and above 1.40 and above
Fully Merchant 2.50 and above based on 2.00 and above based on
risk profile risk profile
CSP Revenue Contract Type Base Case Rating Case

Fully Contracted 1.50 and above 1.40 and above
Partially Contracted 1.70 and above 1.50 and above
Fully Merchant 3.00 and above based on 2.50 and above based on
risk profile risk profile
Note: The base case and rating case coverage ratios above are indicative only. In addition, the actual relationship between
the base and rating cases may vary and is not static. Fitch reserves the right to determine the cushion above or below these
ratios. Comparisons with similar projects and institutional Fitch knowledge will be a source for determining ratios in actual
cases.
Source: Fitch.
Base Case
The base case reflects Fitch’s expectation of long-term sustainable economic and operating
conditions. The Fitch base case is the baseline for surveillance over the life of the debt.
Starting with the sponsor’s base case, Fitch will develop its own base case, incorporating
adjustments to align our performance expectations of the project with the specific
technology operating in similar environments and conditions. The adjustments are based
upon Fitch’s experience and consultation with the third-party engineer. The base case
includes an electric output estimate at P50. Indicative investment-grade debt service
coverage ratios (DSCR) under the base case range from 1.40x to 1.50x and above.
Rating Case
The rating case evaluates the resiliency of the projected cash flow with a combination of
stresses that together simulate a scenario of material underperformance, which is
conceivable but not expected to persist during the life of a PV or CSP project financing.
Fitch typically combines risk factors assessed in the individual stress cases and applies a
combination of stresses that are most likely to affect the plant’s performance. Fitch seeks
to assess with a high level of confidence the probability that a project can meet debt
service obligations. Therefore, Fitch’s rating case is based on a one-year P90 electric
output estimate. The rating case also includes a reduction to the electric output due to
solar resource bias measurement and an adjustment in degradation from the first year of
operation through debt maturity. The availability factor and O&M cost for PV plants will be
adjusted in year one of operation and again in year 16 due to expected declines in balance
of system performance and possible O&M cost increases. While Fitch reviews third-party
engineering estimates of the performance ratio, this metric does not drive the rating.
In evaluating projected financial performance in the rating case, Fitch considers the
overall profile of DSCRs. This profile consists of the average of DSCRs over the life of
the project; the degree that the minimum DSCR deviates from the average; and the
magnitude and frequency with which DSCRs persist below the average. The DSCRs in
the rating case reflect the levels of cash flow cushion available (on top of the
transaction’s available internal liquidity) to mitigate other possible reductions in cash
available for debt service. Some examples of the type of risks that this cushion is
designed to accommodate are:
• Uncertainty of long-term solar panel and balance of system performance due to

insufficient actual operating experience compared with the duration of warranties
and rated debt.

• Uncertainty regarding the impact of varying environmental conditions on panels and

power production such as soiling, temperature, and moisture.
• Evolving nature of solar technology complicates the comparison of past
performance to newer models perpetuating some degree of uncertainty.
• Complex technology that raises the probability of forced outages, resulting in less
than projected electric energy production.
Under the rating case, investment-grade average DSCRs for fully contracted projects are
1.30x and above for PV projects and 1.40x and above for CSP projects. Fitch notes that for
a fully contracted CSP project, the investment-grade DSCR profile is similar to Fitch’s
criteria for fossil-fuel thermal power generation projects as discussed in the thermal
criteria.
The profile of investment-grade debt service coverage ratios is a guide not a prescription
for achieving a specific rating. While Fitch’s rating seeks to quantify major credit risks, as
reflected in Fitch’s projection of DSCRs under stress scenarios, the rating is also informed
by qualitative factors previously discussed such as technology risk, operation risk, debt
structure, and Fitch’s view of the project’s competitive market position. On occasion, Fitch
may have tolerance for lower DSCRs at the investment-grade level based upon structural
and qualitative strengths of the project, which may not be fully reflected in the financial
analysis. Conversely, Fitch may see a need for DSCRs that are higher than the indicative
profile to provide greater financial protection due to structural and qualitative weaknesses
not fully reflected in the financial analysis.
Projects meeting the coverage requirements for investment grade may be constrained
to lower rating categories due to factors such as excessive technical risk, prolonged
merchant tails, sub-investment-grade counterparties, or other key risk factor
assessments. Projects otherwise meeting investment-grade requirements, but
exhibiting coverage ratios lower than indicated for investment grade, are assessed
based on the facts and circumstances particular to the project. For example, a
contracted project with minimum coverage near 1.20x could be rated in the ‘BB’
category if it exhibits very low cash flow volatility, or could be rated in the ‘B’ category
if it faces considerable cost risk. Projects with minimum coverage at or below 1.10x are
generally constrained to the ‘B’ category. It is quite rare that a project is so heavily
capitalized initially that its initial rating is above ‘BBB’.
Fitch recognizes that the utility-scale operating history of many solar technologies is
relatively modest compared with the expected duration of debt for these projects.
Unlike fossil fuel generating projects, there isn’t a long track record of actual cash flow
generation compared with initial projections for utility-scale solar projects. Fitch’s
expectations of utility-scale solar project financial performance will be fine-tuned as
the industry matures and implements lessons learned.

Individual and Break-Even Financial Stresses

Fitch places severe stress on individual key performance variables to determine the
level of exposure and sensitivity of the project’s cash flow to individual events. For
example, Fitch has found that higher-than-expected degradation can materially erode
cash flow for PV projects, while they are less sensitive to plant availability stresses.
Break-even stresses allow Fitch to determine the level of financial stress that a project
could absorb while producing the minimum amount of cash flow to meet debt service
payments just before the point of default, as reflected in DSCRs around 1.0x. Fitch will
also run financial stresses based upon manufactures’ minimum performance guarantees
for availability, capacity, degradation, and electric energy output.
Indicative Solar Project Financial Cases

Base Case Rating Case Break Even (BE)
PV Project Stresses
Electric Output Probability Scenario P50 1-year P90 1-year P99
Solar Resource Bias Adjustment Up to 5% Up to 10% To BE
Annual Panel Degradation 0.3% to 1.0% 0.5% to 2.5% To BE
Availability, Years 1−15 97% to 99% 92% to 99% To BE
Availability, Years 16+ 96% to 98% 91% to 98% To BE
Costs (including O&M and MM), Years 1-−5 Third-party resource +5% to +10% To BE
Costs (including O&M and MM), Years 16+ Third-party resource +10% to +15% To BE
CSP Project Stresses

Electric Output Probability Scenario P50 1-year P90 1-year P99
Solar Resource Bias Adjustment Up to 5% Up to 10% To BE
Availability 95% to 98% 90% to 98% To BE
Costs (including O&M and MM) Third-party resource +5% to +20% To BE
MM − Major maintenance. Note: The base and rating case ranges above are indicative only. Base and rating case adjustments
are predicated on Fitch's experience and consultation with the third-party engineer. A review of the third-party resource
consultant's and third-party engineer's reports will be a source for assigning values in actual cases.
Source: Fitch.
Estimated Electric Output: For PV and CSP, Fitch may reduce the overall estimated
electric output by up to 10% to account for measurement bias errors.
Availability/Capacity Factor: Fitch considers the impact of reduced availability and
capacity factors for PV and CSP.
O&M: Fitch considers the cash flow impact of a sustained increase in O&M expenses,
direct (including major maintenance) and indirect such as general administration,
including property taxes.
Panel Degradation: The percentage of annual degradation that Fitch applies will be
informed by the third-party engineer.
P99: Fitch will assess a project’s performance under a one-year P99 scenario in which
investment-grade projects are expected to achieve DSCR results that are at or above
1.0x.
Merchant Prices: Fitch has observed that solar power projects generally do not face
exposure to merchant market prices. However, Fitch may apply merchant price
sensitivity analysis when there is a high-priced PPA with a weak counterparty, as there
is a potential for contract termination causing the project to sell power on the open
market. In cases where the project is exposed to merchant risk, Fitch will consider the
level of market price decrease a project can sustain and still meet debt obligations at a
particular rating level. Fitch generally relies on its third-party market consultants’ view

of market price projections and adjusts these projections based on Fitch’s experience
and market outlook.
Fitch will also apply as it deems appropriate and in accordance with the project’s
contractual agreements, additional stresses consistent with project financings in other
power sectors. These additional stresses include construction delays, financing costs,
and inflation.
Financial Analysis ⎯ Counterparty Risks

Counterparty risk addresses the financial obligations of project counterparties such as
Counterparty Risks
off-takers, affiliate-contractors, affiliate-operators, affiliate or non-affiliate equipment
(◊)
warranty providers, and third-party insurers. It does not address third-party consultants
Stronger counterparties are that are not defined as financial counterparties by Fitch. As with any counterparty,
rated above the senior
Fitch’s rating of the counterparty is the starting point. There are typically more
project debt rating, are
capable of replacement situations for solar project counterparties where a Fitch rating is not available, or the
without impacting the rating, analyst relies on an internal or private credit opinion. In this case, an internal rating
and have legally binding may need to be assigned to the counterparty. Legally binding counterparty contracts,
obligations to the project. no counterparty history of payment delays, or contract disputes, and a legally binding
obligation with strong legal jurisdictional enforcement are considered stronger.
Midrange counterparties are
rated at the senior project
debt rating, and contract
enforcement is subject to the
region or jurisdiction but
with a precedent of
enforcement.
Weaker counterparties are

rated below the senior
project debt rating and are
not capable of replacement.
Weaker counterparties may
also have a history of
contract dispute or payment
delays and some or all
contracts may not be
enforceable.

Appendix A: Key Rating Drivers for Solar Power Projects
Completion Risk
Information Quality Completion Risk Warranties Operation Risk Revenue Risk Debt Structure
Stronger • Solar resource Contractors Warranty Performance • Fixed-price, long- • No merchant market • Fully amortizing,
assessment applies • Investment-grade • Warranty exceeds term O&M exposure. fixed rate with debt
most rigorous EPC or owner/ the industry agreement with • PPA/FIT maturity that matures prior
methods and constructor. standard. investment-grade exceeds debt to PPA/FIT maturity.
measurement tools providers or, maturity. • Equity distribution
commensurate with Contract Terms Manufacturer • Incentive-based • PPA/FIT with strong threshold: at least
project’s technology • EPC fixed price, • Investment-grade O&M agreement investment-grade 1.2x DSCR.
including at least date certain, manufacturer. with investment counter party • Debt service reserve
one year on site turnkey. • Long history of grade provider, (AAA/AA). account greater
data correlated to • Completion stable operating and • Major maintenance • Oversized solar field than six months of
longer industry data guarantee from financial or O&M reserves is that exceeds PPA debt service.
set. creditworthy party. performance. fully funded in requirement for • Other covenants to
• Energy production • Liquidity covers • National or advance to cover energy delivery to ensure timely or
under P50, 1-year liquidated damages, international market overhauls during the mitigate risk of less- early debt
P90, and 1-year P99 debt service. presence. term of the debt than-projected solar repayment; prevent
scenarios are • Schedule is • Conglomerate that is • Technology is proven insolation. over leveraging of
developed. adequate to not dependent on with a long assets; and provide
• Third-party reports complete project nascent sectors. operating history adequate liquidity at
address the budget, and avoid PPA/FIT and less project level.
technology, termination. performance
manufacturer, uncertainty.
completion and Technology Risk
operation risks. • Proven technology;
low construction risk
Midrange • Solar assessment is Contractors Warranty Performance • O&M agreement • PPA/FIT matches • Fully amortizing,
based upon ground- • Experienced possibly • Standard industry with experienced full term of debt fixed rate, no tail
based data located investment grade. warranty coverage provider. with investment- risk.
close to the site and for serial defects • Agreement is shorter grade counterparty; • Distributions:
correlated to longer Contract Terms and long-term than the term of the or, 1.15x−1.19x DSCR.
satellite data set. • Owner/contractor, output. For PV this debt. • Merchant exposure • Debt service reserve
with strong budget includes five-year • Performance covers small portion equal to six months
Third-party reports contingencies and warranty on panels incentives. of debt for a project debt service, funded
adequately address: creditworthy parent and 90% of initial • Agreement may that is price- upfront.
• Energy production guarantees. nominal output in have fixed or competitive under • Other covenants to
under P50 and • Liquidity covers first 10 years and escalating Fitch’s power price ensure timely debt
1-year P90 liquidated damages 80% for 20−25 years. management fees stress scenarios. repayment; prevent
scenarios. and debt service. CSP technical plus out-of- pocket over leveraging of
• Technology risk. • Schedule is warranties range reimbursements. assets; and provide
• Manufacturer risk. adequate to 24−36 months. • Major maintenance adequate liquidity at
• Completion and complete project is adequately funded project level.
operational risk. and avoid PPA/FIT Manufacturer on an accrual basis.
• Adequacy of termination. • Investment-grade • Technology is proven
sponsor’s budget. manufacturer with limited
Technology Risk concentrated in the commercial
• Proven technology; solar sector, or application and
more complex. experienced midranging
conglomerate close performance
to investment grade uncertainty.
with solid financial
position to fulfill
guarantees.
Weaker • No independent Contractors Warranty Performance • O&M provider with • PPA/FIT with below • Tail and/or
electric output • Multiple weak • Warranty is below little experience investment-grade refinance risk.
estimate or only P50 contractors. the industry with the technology. counterparty. • Debt maybe within
is provided. standard. • Cost plus agreement • Weak PPA useful life of asset
• Solar assessment is Contract Terms lacking incentives. termination but longer than
based solely on • Inadequate budget Manufacturer • Inadequate provisions. industry average.
satellite data contingencies, weak • Experienced but maintenance • Merchant exposure • Distributions below
without appropriate parent guarantees. below investment- reserves. to cover significant 1.15x.
adjustments for data • Delays easily lead to grade manufacturer • Proprietary, new, or portions of debt. • Debt service reserve
quality and PPA/FIT termination or, obsolete technology • Merchant project is less than six months
technology; subject or optimistic • New manufacturer where parts are not not competitive or not fully funded
to material caveats; completion with little easily replaceable or under Fitch’s low- upfront.
limited scope. schedule. experience, are expensive, and a price merchant • Weak provisions
• Inadequate review questionable high level of power projections. allow overleveraging
of completion, or Technology longevity, and performance of assets.
operation risks. • Unproven or financial strength, uncertainty over the
demonstration-phase non-investment long term.
technology pose grade.
greater scale up and
completion risks.
EPC − Engineering, procurement, and construction. PPA − Purchase power agreement. FIT − Feed-in tariff.
Source: Fitch.

Appendix B: Solar Technologies

Photovoltaic (PV)
PV panels are appealing as a generation source because of their simplicity, easy
scalability, long history as a commercially viable product, and relatively simple
operation and maintenance when compared with other forms of generation. The
essential building block of a PV solar plant is the PV cell, a solid state technology with
no moving parts. This very simple design is by definition modular: each cell is grouped
with more replicas of itself into a panel, and any number of panels can be grouped to
produce the desired output of electricity. Scale-up risk of PV is fairly small because
panels are used in typical size, only in greater number, to reach the utility scale. PV
panels were first applied as back-up power in space satellites in the mid-1960s, and
have enjoyed a long history primarily as a distributed generation source or for
residential use since that time.
Crystalline Silicon PV: The oldest PV technology employs crystalline silicon (c-Si) as the
semiconductor material in the PV cell, including both monocrystalline and
polycrystalline silicon panels. Fitch considers crystalline silicon PV technology
commercially proven based on seven to 10 years of utility-scale use, its well known,
well-researched properties, and more than 30-year commercial track record as non-
utility-scale electric power source.
Thin Film PV: Considered the second generation of PV technology, thin film solar cells
have been developed and commercially deployed in utility-scale projects since 2005.
Fitch generally considers thin film PV technology a midrange risk based on its recent
commercial use, and its current limited application at the utility-scale compared with
crystalline silicon. The three most prevalent thin film technologies are amorphous
silicon (a-Si), cadmium telluride (CdTe), and copper indium gallium diselenide
(CIGS)/copper indium diselenide (CIS).
Concentrating PV: Concentrating PV (CPV) is considered an emerging technology
because it does not have a commercial track record. While not yet employed at the
utility scale, several utility-scale CPV plants are currently in development. CPV makes
the cross between traditional PV and CSP (discussed in the next section) in that CPV
concentrates sunlight onto a photovoltaic surface using either reflective mirrors or
acrylic lenses. Current CPV panels include up to three layers of nonsilicon

semiconductors stacked on top of another that each convert a different portion of the
solar spectrum into electricity to permit a higher conversion efficiency than traditional
PV panels. CPV is only effective using DNI, and does not use diffuse or reflected light
that is the mainstay of traditional PV. Therefore, CPV is limited to hot or desert-like
climates, similar to traditional CSP plants.
PV Technology Comparison
Feature c-Si a-Si CdTe CIGS/CIS GalnP/GaAs/Ge
Semiconductor Carbon silicon Amorphous Cadmium Copper indium Gallium indium
silicon telluride (gallium) phosphide and/or
diselenide gallium arsenide
and/or germanium
Thin Film non- Thin Film non- Concentrating PV,
Type Bulk silicon Thin Film silicon
silicon silicon nonsilicon
First Application Space Calculators in Electricity in Electricity Space satellites
satellites in 1970s 2000s generation
1960s
7−10 years
Utility-Scale History 5 years (2005) 3 years (2007) In development In development
(2000)
Utility-Scale Use Proven Proven Proven Unproven Unproven
Complexity Low Low Low Low High
Efficiency (%) 14−19 6−12 10−12 10−15 20 +
Panel Degradation (%) 0.3−1.0 0.7−1.5 0.7−1.5 1.0−2.0 Unknown
Source: Fitch.
Concentrating Solar Power (CSP)

CSP technology is appealing because of its ability to generate massive amounts of heat,
and its ability to either convert that heat into electricity or store the heat temporarily
using conventional thermal storage technologies. CSP is a proven but complex
technology that can be susceptible to scale-up risks and operates more like a
traditional power plant for operations and maintenance and use of water cooling. This
technology employs reflective mirrors with tracking systems and conventional steam
turbines that utilize many moving parts to produce electric output.
There are important differences that distinguish CSP plants from traditional thermal
fossil fuel plants. Unlike fossil fuel plants, CSP plants with traditional turbines have no
dispatchability without a storage mechanism, and even now storage acts to smooth
output rather than permit dispatch based on demand. Heat storage systems capture
excess concentrated heat and retain it in nitrate molten salts that can achieve
temperatures approaching the concentrated heat of the plant. When the horizon is
cloudy or the sun has set, the molten salts heat the steam that drives the turbines. In
the middle of the schematic below, the hot and cold tanks show where the heated and
cooled molten salt is stored. The risks of using molten salts for thermal storage include
avoiding their “freezing” temperature (still above 200-degrees Celsius), and the
corrosive properties of these materials that require higher maintenance outlays.
A final distinguishing factor of CSP plants versus traditional thermal fossil plants is
the requirement of a solar tracking system. Solar tracking is a mechanical system that
continually positions the mirrors or lenses of a solar thermal plant perpendicular to
the sun as it moves across the sky. Because solar thermal plants use only DNI to
generate heat, a tracking system is vital to maintaining their energy output. Tracking
can be single-axis, which moves a maximum of 180 degrees from east to west in a
linear fashion, or dual-axis, which can move a full 360 degrees in a circle as needed
to collect direct sun. Tracking systems are electronically controlled, and are
programmed to optimize DNI by time of day and time of year. The greatest common
threat of damage to a CSP plant is wind, which can break the mirrors. Operators use

the tracking system to turn the mirrors to “stow position” to protect them during high
winds.
Currently there are four primary variations of CSP technologies: parabolic trough,
power tower, dish engine, and linear Fresnel reflector.
Parabolic Trough: Parabolic troughs collect the sun’s energy using long rectangular,
parabolic U-shaped mirrors and single-axis tracking. Fitch considers parabolic trough
technology to be commercially proven, based on the 20-year or more operating history
of the technology in the U.S. Parabolic troughs have more widespread successful
application internationally than any other CSP technology. Parabolic troughs have
successfully employed heat storage.
Solar Power Tower: Another, more recently implemented, utility-sized CSP technology
is a solar power tower. A solar power tower utilizes a field of dual-axis tracking mirrors,
called heliostats, which reflect direct radiation onto a receiver that is located at the
top of a tall, centrally located tower. Based on its successful utility-size operating
history since 2007, Fitch considers the power tower a proven technology with a limited

application, and therefore, a midrange technology risk. Solar towers have also
successfully implemented heat storage.
Solar Dish Engine: Solar dish-engine technology to date is in utility-scale development.
The technology is currently employed on a demonstration scale. Dish-engine technology
uses a set of flat (or slightly curved) heliostats clustered into a parabolic-shaped dish
that concentrates sunlight onto a receiver in the center of the dish. The most advanced
solar dish technology employs a mini-generator on the receiver itself. Solar dish engines
use dual-axis tracking and do not require water cooling. Fitch currently considers solar
dish engines unproven, and a weaker technology risk. Solar dish engines do not
currently use heat storage.
Linear Fresnel Reflector: No linear Fresnel reflectors are currently built to utility size,
but the technology is very similar to a parabolic trough. Compact linear Fresnel
reflectors have been deployed as pilots in the U.S. and Spain, but are currently
unproven at the utility scale, and would be considered a weaker technology risk.
CSP Technology Comparison

Type Parabolic Trough Power Tower Dish-Engine Fresnel Reflector
Concentrator Linear Point Point Linear
Concentration Level 80 times 1,500 times 1,500 times 30−80 times
Utility Scale History 25 years (1985) 3 years (2007) None None
Utility Scale Use Proven, trough field Commercially proven Development, all Pilot, reflectors
modular with limited recent modular modular
application, heliostat
field modular
Generator Turbine power block Turbine power block Stirling engine Turbine power block
Storage Possible Yes Yes Yes No
Storage Duration 3−6 hours 3−6 hours Unknown None
Up to 800 gallons per Up to 500 gallons per Up to 800 gallons per
Water Use None
MWh MWh MWh
Complexity High High High High
Efficiency (%) 15 to 20 20 to 25 30 to 32 8 to 10
Source: Fitch.

Appendix C: Typical Risk Factor Assessments for Solar Power Projects

(Investment-grade ratings are typically associated with projects, structures, and instruments displaying predominantly stronger or midrange attributes.)
Risk Factor Typical Range Comments

Ownership and Sponsors (◊) Midrange For most projects covered by this report, the sponsor group is likely to
have midrange attributes. With stronger attributes, the sponsor has
extensive experience (multiple investments) in the sector and strong
financial capacity and locked into the project during the key risk
periods through ownership covenants, such as utilities as opposed to
midsize independent power producers. Stronger attributes are more
important for more complex or newer technologies.
Project Vehicle Status and Project Midrange
Structure
Jurisdiction and Other Legal Stronger Assuming country is rated AAA/AA. Midrange or Weaker would be
associated with more unstable regimes or emerging markets.
Use of Expert Reports Midrange Mostly third-party technical reports on the solar resource, construction
and operating activities, and market risk.
Information Quality Stronger/Midrange/Weaker Midrange/Weaker typically in the case of preliminary draft reports or
missing information.
Contractors (◊) Stronger/Midrange/Weaker/N.A. (if in For smaller PV projects with proven technology and simple construction,
Operation) the contractor may have Midrange attributes. For larger or more
complex projects (CSP and large PV), a midrange or stronger contractor
would be necessary to achieve an investment-grade rating.
Cost Structure Midrange/N.A. (if in Operation) Assuming EPC contract.
Delay Risk Midrange/N.A. (if in Operation) Assuming EPC contract.
Contract Terms Midrange/N.A. (if in Operation) Assuming EPC contract.
Technology Risk (Precompletion) Stronger/midrange/N.A. (if in Operation) Stronger usually for proven technology with greater certainty of operating risks
and costs and weaker for new and unproven technology with more
operating and cost uncertainty, which may act as a rating constraint.
However, a robust supporting warranty and performance guarantee from
credit-worthy counterparty, among other structural mechanisms, would be
necessary to avoid constraining the rating.
Operator Midrange Midrange attributes are generally associated with operators with
extensive experience and familiarity with similar technology. Weaker
attributes would relate to projects with new or revolutionary
technology that does not lend itself to ease of operator replacement.
Costs (◊) Midrange Midrange attributes will generally be assigned to projects with hard FM
and lifecycle cost allocated in the first instance to an experienced
operator, with lifecycle cost provision in line or higher than peers.
Weaker attributes would be associated with less experienced operators
and a cost profile that is not fixed or performance-based.
Supply Risk Midrange Midrange attributes will generally be assigned to well-established and
supportable projections by third-party assessment of an expert and
well-mitigated mismatch risk were applicable. Weaker attributes would
be associated with less proven resource base and would be rating
constraining.
Technology Risk (Operations) Midrange Weaker attributes will generally be for revolutionary technology given the
dearth of operators with such technology experience.
Tail Risk Stronger/Midrange/Weaker Generally midrange where contracts match the tenor of the debt and
weaker projects have material exposure to the merchant market. This
risk factor is generally an issue of cost recovery.
Gross Revenue/Off-take (◊) Midrange Power projects would typically have Midrange attributes in this category,
unless the project is significantly exposed to merchant risk or weak off-
take counterparty in which case Weaker attributes apply.
Obsolescence/Economic Midrange
Life/Remediation
Termination Event Risk Stronger/Midrange
Country and Political Risks Stronger Assuming country is rated AAA/AA.
Industry Risks Midrange
Debt Characteristics and Terms Midrange
EPC − Engineering, procurement, and construction. PV − Photovoltaic. CSP − Concentrating solar power. FM − Facilities Management. N.A. − Not applicable.
Source: Fitch.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS
AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION,
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Copyright © 2011 by Fitch, Inc., Fitch Ratings Ltd. and its subsidiaries. One State Street Plaza, NY, NY 10004.Telephone:
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Global Infrastructure & Project Finance

Analysts Scope and Summary

Key Rating Drivers

www.fitchratings.com February 23, 2011

Risk Factor Assessment: Financial Analysis

2 Rating Criteria for Solar Power Projects February 23, 2011

Project Analysis ⎯ Completion Risk

Construction Contract Terms

Rating Criteria for Solar Power Projects February 23, 2011 3

Stronger contracts will include an obligation of an EPC contractor to design and

4 Rating Criteria for Solar Power Projects February 23, 2011

Rating Criteria for Solar Power Projects February 23, 2011 5

Indicative Construction Terms for Investment-Grade Ratings

Risk Factor Assessment: Project Analysis ⎯ Operation Risk

6 Rating Criteria for Solar Power Projects February 23, 2011

Rating Criteria for Solar Power Projects February 23, 2011 7

Types of Solar Energy and Measurement Instruments

• Direct normal irradiation (DNI or direct radiation) is the incident solar

Resource Data Quality (◊)

8 Rating Criteria for Solar Power Projects February 23, 2011

Risk Factor Assessment: Electric Output Estimate

Rating Criteria for Solar Power Projects February 23, 2011 9

Output Probability Scenarios

10 Rating Criteria for Solar Power Projects February 23, 2011

Rating Criteria for Solar Power Projects February 23, 2011 11

General Comparison of Solar Technologies

Risk Factor Assessment: Project Analysis ⎯ Revenue Risk (◊)

12 Rating Criteria for Solar Power Projects February 23, 2011

Project Analysis ⎯ Macro Risks

Rating Criteria for Solar Power Projects February 23, 2011 13

Financial Analysis ⎯ Debt Structure

Debt Characteristics and Terms

Financial Analysis ⎯ Debt Service

14 Rating Criteria for Solar Power Projects February 23, 2011

Indicative Solar Project ‘BBB’ Category Cover Ratios

CSP Revenue Contract Type Base Case Rating Case

• Uncertainty of long-term solar panel and balance of system performance due to

Rating Criteria for Solar Power Projects February 23, 2011 15

• Uncertainty regarding the impact of varying environmental conditions on panels and

16 Rating Criteria for Solar Power Projects February 23, 2011

Individual and Break-Even Financial Stresses

Indicative Solar Project Financial Cases

CSP Project Stresses

Rating Criteria for Solar Power Projects February 23, 2011 17

Financial Analysis ⎯ Counterparty Risks

Weaker counterparties are

18 Rating Criteria for Solar Power Projects February 23, 2011

Appendix A: Key Rating Drivers for Solar Power Projects

Rating Criteria for Solar Power Projects February 23, 2011 19

Appendix B: Solar Technologies

20 Rating Criteria for Solar Power Projects February 23, 2011

Concentrating Solar Power (CSP)

Rating Criteria for Solar Power Projects February 23, 2011 21

22 Rating Criteria for Solar Power Projects February 23, 2011

CSP Technology Comparison

Rating Criteria for Solar Power Projects February 23, 2011 23

Appendix C: Typical Risk Factor Assessments for Solar Power Projects

Risk Factor Typical Range Comments

24 Rating Criteria for Solar Power Projects February 23, 2011

Rating Criteria for Solar Power Projects February 23, 2011 25

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