News Column

Fitch Updates Rating Criteria for Solar Power Projects

February 27, 2014



NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has published an update of its 'Rating Criteria for Solar Power Projects', which describes the analytical framework Fitch applies to evaluate debt issued for a broad range of utility-scale photovoltaic (PV), concentrating PV, and concentrating solar power projects worldwide. The solar projects discussed in the report are financed as stand-alone assets (or portfolios) with no formal guarantee of debt service from the sponsors (nonrecourse).

The updated report replaces the existing criteria (published Feb. 21, 2013) without modifying Fitch's analytical approach. The report includes further clarification of Fitch's assessment of solar power projects in operation compared to projects under construction. No changes to the ratings of existing transactions are anticipated as a result of the application of the updated rating criteria.

The updated criteria report provides a summary of the broad attributes that support the ratings for solar power projects. The report highlights six key rating drivers Fitch evaluates when rating debt issued for solar power projects. The criteria report also identifies typical attributes for five of the key rating drivers, summarized below, which are assessed as strong, midrange, and weak. Debt service is no longer subject to the attributes assessment though it is still a key driver that is factored into the rating.

--Completion Risk: Reasonableness of plan to achieve commercial operation considering technology risk, contractor qualifications, and construction contract terms including completion guarantees.

--Operation Risk: Stability and adequacy of plant performance supported by a qualified operator, comprehensive maintenance regime, and reliable technology.

--Revenue Risk- Volume: Measured variability of solar resource; scope, quality, and reliability of a project's energy production forecast.

--Revenue Risk- Price: Strength, duration, and flexibility of the power sales arrangement as well as the stability of the regulatory support framework.

--Debt Structure: Composition of payment terms and strength of covenants to support debt payment, maintain adequate liquidity, and limit leverage.

--Debt Service: Cash flow resiliency to support timely debt payment under base case, stress case, and break-even financial scenarios.

The full report, 'Rating Criteria for Solar Power Projects', is available at 'www.fitchratings.com'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research: Rating Criteria for Solar Power Projects (Utility-Scale Photovoltaic, Concentrating Photovoltaic, and Concentrating Solar Power)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=737230

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, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.



Fitch Ratings

Americas

Yvette Dennis, +1-212-908-0668

Director

Fitch Ratings, Inc.

33 Whitehall St.

New York, NY 10004

or

Nicole Czarny, +1-212-908-0684

Associate Director

or

EMEA

Jelena Babajeva, +44 20 3530-1375

Director

or

Christiane Kuti, +44 20 3530-1396

Associate Director

or

Media Relations

Brian Bertsch, +1-212-908-0549 (New York)

brian.bertsch@fitchratings.com

Source: Fitch Ratings


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