Singapore developer signs first Asean green loan for rooftop solar projects

ING has structured a green loan to finance a series of rooftop solar projects under a single loan facility, with each project offering favourable power purchase agreement packages

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Singapore solar energy system developer, owner and operator, the Sunseap Group, through its subsidiary Sunseap Commercial Assets Private Limited, has signed a S$50 million (US$37 million) green loan, the proceeds of which will be used to finance a portfolio of rooftop solar projects.

The loan, announced on April 3, is the first green loan in Asean that is compliant with the Loan Market Association (LMA) and the Asia-Pacific Loan Market Association (APLMA) green loan principles. ING acted as the green structuring adviser for the transaction and the sole mandated lead arranger. This is the bank’s first solar rooftop financing deal in Asia-Pacific.

The rooftop solar projects in Singapore will range from about 100kW to 5MW in size, and will benefit from long-term power purchase agreements with more than 20 international and domestic commercial and industrial corporates such as PSA.

Rooftop solar projects tend to be uneconomical to finance on an individual basis due to their small scale, and therefore are generally funded on a guaranteed basis. But in this particular case, the bank has created an innovative structure to finance this portfolio of rooftop solar projects on a limited recourse basis – without a corporate guarantee from Sunseap – and in a single loan facility.

“The financing is expected to help different industries in Singapore – from education to transportation to technology – offset their carbon footprint,” says Erwin Maspolim, head of utilities, power and renewables for Asia-Pacific at ING.

The loan is on the back of a green finance framework created for Sunseap, which is aligned to a number of global principles. Under this framework, Sunseap and its subsidiaries will be able to raise green financing instruments (including green loans, green bonds or other debt instruments) to finance or refinance green projects in three eligible areas: renewable energy, energy efficiency and green roof systems.

These can cover renewable projects, including rooftop solar, run-of-river hydro and wind energy; energy efficiency projects such as smart grids, battery storage and LED lighting retrofits, as well as rooftop greenery projects.

Sustainalytics, a leading global provider of ESG research and ratings, provided a second-party opinion on Sunseap’s green finance framework, concluding that the package is credible and impactful, and contributes to UN Sustainable Development Goals (SDGs) surrounding affordable and clean energy, and on sustainable cities and communities.

“We expect this deal to spark off more demand for loans compliant with green loan principles in the renewable energy sector,” adds Herry Cho, head of sustainable finance for Asia-Pacific at ING.

Financing renewable energy and energy efficiency projects, according to ING, is crucial for countries in the Asia-Pacific region. Some estimates suggest that by 2025 Asean countries will be home to over 715 million people, many of whom currently lack access to modern energy services. Renewables can play a key role in ensuring clean and affordable energy for people across the region.

ING recently became the first global bank to use a science-based approach to steer its business strategy towards meeting the temperature targets set by the Paris Climate Agreement. This initiative, called the Terra approach, enables ING to measure the bank’s lending portfolio against climate-based scenarios. ING will focus specifically on the sectors that are responsible for most greenhouse gas emissions using a customized approach per sector in order to make the most impact.

“Energy is one of the key sectors for ING, and supporting renewable energy projects is clearly aligned with the goals for our Terra approach,” says Cho.

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Date

4 Apr 2019

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