When discussing photovoltaic projects of a certain scale, one term often comes up: the SPV, or Special Purpose Vehicle. This isn’t just technical jargon to complicate things. In reality, it’s a fairly common structure that helps organise the financing and management of these installations. We’ll take a closer look at what it is, what it’s for, and why it’s important when you want to invest in or develop a solar project.

Key Takeaways

• An SPV, or Special Purpose Vehicle, is a legal entity created specifically to own and manage the assets of a renewable energy project, such as a solar power plant.
• Its main role is to separate the financial and operational risks of the project from those of the parent company, thereby facilitating financing.
• The financial structure of an SPV often relies on a mix of debt (loans) and equity, allowing for optimised return on investment.
• The creation of an SPV simplifies access to external financing, particularly via ‘project finance’, and makes it easier for financial partners to get involved.
• The SPV ensures the management of electricity sales revenues, payment of charges, and repayment of investors, all while complying with current regulations.

Understanding the Special Purpose Vehicle (SPV) in Photovoltaics

In the field of solar energy projects, a specific structure is often put in place to manage financial and operational aspects: the Special Purpose Vehicle, or SPV. This is a legal entity created for a precise purpose: to own and operate a given photovoltaic project. This approach allows for a clear separation of the project’s assets and liabilities from those of the parent company or other group activities. Essentially, it’s like creating a small company just to handle a solar power plant, from its construction to its profitability.

Definition of an SPV in the photovoltaic context

An SPV, in the context of photovoltaics, is a company created specifically for a solar project. Its existence is intrinsically linked to this unique project. It will own all the elements necessary for the life of the plant: the land, solar panels, inverters, electricity sales contracts, insurance, and even the equity and debt contracted to finance the installation. The main objective is to legally and financially isolate the project. This means that the debts and risks associated with this solar project do not directly burden the parent company. This is a common practice for renewable energy projects, as they represent significant investments and have specific revenue streams linked to electricity production. SPVs are eligible to respond to calls for projects, such as those concerning photovoltaic installations.

The role of the SPV in holding project assets

The SPV acts as the true owner of the photovoltaic project’s assets. It holds the contracts, permits, and of course, the installations themselves. This includes access to land, production equipment, as well as maintenance contracts and insurance. By centralising asset ownership within the SPV, management is simplified, and a clear guarantee is offered to lenders and investors. The latter lend money or invest knowing that their funds are directly linked to the assets of the solar power plant. If the project encounters difficulties, creditors have a right of inspection and potentially a right over these specific assets, without affecting the rest of the assets of the company that initiated the project. This is a way of structuring the investment to make it safer and more attractive.

SPV: a subsidiary dedicated to the renewable energy project

Very often, the SPV is a subsidiary of the company developing the solar project. The parent company, which may be a large energy company or a specialised developer, creates this distinct legal entity. The parent company can thus group several SPVs, each corresponding to a different solar project, whether it is under construction or already in operation. This structure allows the parent company to manage a portfolio of solar projects in an organised manner. Each SPV operates autonomously for its specific project, collecting revenues from electricity sales, paying its operating expenses, and repaying the contracted debt. This is a model that facilitates risk management and access to financing, particularly via debt financing.

The creation of an SPV is a key step in the financial and legal structuring of a photovoltaic project. It allows for the compartmentalisation of risks and facilitates access to external financing, while offering clear governance for the project’s assets.

Operation and objectives of an SPV in a PV project

A Special Purpose Vehicle (SPV) is a legal structure created specifically to carry a solar energy project. Its operation is designed to isolate the financial and operational aspects of the project from those of the parent company. The main objective is to effectively manage the revenues generated by electricity production while ensuring the repayment of investors and the coverage of operating expenses.

Plant operation and revenue generation

The SPV takes charge of the daily operation of the photovoltaic plant. This includes monitoring production, preventive and corrective maintenance of equipment, and managing electricity sales contracts. Revenues primarily come from the sale of electricity produced, whether through Power Purchase Agreements (PPAs) or market mechanisms such as tenders. Optimising production and securing revenues are at the heart of its mission.

Expense management and investor repayment

Once revenues are collected, the SPV must cover its operating expenses. These include maintenance costs, insurance, personnel costs, taxes, and administrative fees. A significant portion of the revenues is then allocated to repaying the debts contracted to finance the project, whether bank loans or other forms of financing. Adhering to repayment deadlines is essential to maintain the confidence of lenders and investors. Financial indicators such as the DSCR (Debt Service Coverage Ratio) are closely monitored to ensure the project’s ability to meet its commitments.

Compartmentalisation of financial and operational risks

One of the major advantages of the SPV is its ability to compartmentalise risks. By being a distinct legal entity, it isolates the financial and operational risks of the project from those of the company that created it. If the project encounters difficulties, the assets of the parent company are not directly threatened. This structure also facilitates the entry of new financial or technical partners into the SPV’s capital, without diluting the initiating company’s responsibility for its other activities. This is a preferred approach for medium to large-scale projects, to better manage exposure to technical and financial uncertainties, and to secure investment in technologies such as solar, which benefit from a quality certification.

The creation of an SPV allows a photovoltaic project to be structured in a way that makes it more attractive to investors and lenders. It offers clarity on the financial flows dedicated to the project and protection for the parent company against potential failures of the latter. This separation is a common practice in the financing of renewable energy projects, where capital intensity is high.

The objectives of the SPV can therefore be summarised as operating the plant, generating stable revenues, managing costs, repaying financing, and, above all, protecting the parent company from project-specific risks. This contributes to the long-term viability of the project and the confidence of stakeholders, including local authorities who may be involved in the capital of these structures dedicated to renewable energy.

Financial structure and financing of a photovoltaic SPV

The establishment of a Special Purpose Vehicle (SPV) for a photovoltaic project involves careful financial structuring. The objective is to mobilise the necessary capital while optimising the return on investment for stakeholders. This structure allows for the separation of the project’s financial flows from those of the parent company, thus offering better visibility and more targeted risk management.

Debt and equity financing

The financing of an SPV generally relies on a combination of equity and debt. Equity, provided by founding shareholders or external investors, constitutes the first layer of financing. It demonstrates the commitment of the project developers and serves as a basis for attracting debt. Debt, often bank loans, represents the major part of the financing, typically between 65% and 85% of investment costs (CAPEX). This significant reliance on debt, known as project finance, allows for the amplification of equity profitability.

• Equity: Provided by the parent company, specialised investors, or via crowdfunding.
• Debt: Generally contracted with banks, it is backed by the project’s future revenues.

The split between debt and equity is a key indicator of the SPV’s financial strength and risk-taking strategy. A high debt ratio can increase profitability but also risk in case of project underperformance.

The role of bond issues and crowdfunding

Beyond traditional bank financing, SPVs can explore other avenues to raise funds. Bond issues allow for the mobilisation of significant sums from a wide range of institutional or private investors. Crowdfunding, on the other hand, offers an alternative to involve citizens, local authorities, or employees, thereby strengthening the project’s local roots. These methods can complement or, in some cases, replace bank financing, particularly for smaller projects or to diversify funding sources.

Debt/equity ratio in mature SPVs

For mature photovoltaic projects, where revenues are secured and technical risks are well controlled, the debt/equity ratio can be significantly high. It is not uncommon to see ratios of 70-30, or even 80-20, meaning that the SPV borrows 7 to 8 times the amount of equity contributed. This level of indebtedness is made possible by the predictability of cash flows generated by electricity sales, often guaranteed by long-term purchase agreements (PPAs or Feed-in Tariffs). Lenders are thus reassured about the SPV’s ability to repay its debts. This bank leverage mechanism is a pillar of renewable energy project financing, allowing for the maximisation of return on equity. To learn more about the financial aspects of energy projects, consulting regulatory and fiscal frameworks is an important step.

Advantages of creating an SPV for solar projects

The establishment of a Photovoltaic Project Company (SPV) offers several major advantages for the development and financing of solar projects. This dedicated legal structure allows for the compartmentalisation of risks and facilitates access to external financing, which is particularly relevant for medium to large-scale installations. By isolating the project’s assets and financial flows from those of the parent company, the SPV provides welcome protection.

Facilitating the entry of financial partners

One of the most notable benefits of creating an SPV lies in its ability to attract investors and lenders. Indeed, the SPV constitutes a clear legal entity, specifically holding the project’s assets (such as solar panels, electricity sales contracts, etc.). This clarity makes the investment more transparent and less risky for third parties. They can thus more easily acquire equity stakes or grant loans, knowing that their return on investment is directly linked to the performance of the solar plant itself. This opens the door to larger financing and more favourable conditions.

Simplification of recourse to external financing (project finance)

The SPV model is intrinsically linked to the concept of project finance. This type of financing relies on the project’s own ability to generate sufficient cash flows to repay the contracted debt. The SPV, as an autonomous legal structure, is the ideal borrower in this scheme. Banks and other financial institutions are more inclined to lend significant sums when the debt is backed by the future revenues of the plant and when risks are clearly delimited within the SPV. This reduces the need for equity from the company initiating the project, often around 20 to 30% of the total investment, with the remainder covered by debt. For example, for a project of 10 million euros, the company might only contribute 2 to 3 million euros, with the SPV borrowing the remaining 7 to 8 million euros.

Adaptation to medium to large-scale projects

For large-scale solar projects, whether large ground-mounted power plants or photovoltaic parks on industrial rooftops, the SPV structure becomes almost indispensable. It allows for the management of the inherent complexity of these operations, particularly in terms of contracting, financial flow management, and risk allocation among the various stakeholders. Small-scale projects can sometimes be financed directly by the parent company, but as soon as the investment exceeds a certain threshold, the SPV offers a more robust and suitable solution for securing financing and optimising profitability. This approach fosters the growth and realisation of high-impact projects, thereby contributing to the energy transition. Solar power plants greatly benefit from this structuring.

The creation of an SPV is not just a simple administrative formality; it is a financial and legal strategy aimed at optimising fundraising, controlling risks, and ensuring the long-term viability of photovoltaic projects.

The legal and fiscal setup of an SPV

The establishment of a Photovoltaic Project Company (SPV) involves careful legal and fiscal structuring. It’s not just about creating a new entity, but about building a framework that meets the specific requirements of the solar project and its financiers. The choice of legal form is a crucial first step, as it will influence governance, shareholder liability, and the terms of share transfer. Common options include the Simplified Joint Stock Company (SAS) for its flexibility, or the Public Limited Company (SA) for larger projects requiring a more formal structure. The goal is to create a structure that is both robust and adaptable.

Choosing the appropriate legal structure

The choice of legal structure for a photovoltaic SPV is a strategic decision that must be aligned with the project’s objectives and investors’ expectations. The flexibility offered by the SAS makes it a preferred choice for many solar projects. It allows great freedom in drafting the articles of association, thus offering the possibility of organising governance and shareholder relations in a tailor-made manner. For projects of considerable scale, where transparency and regulatory compliance are paramount, the SA may be more appropriate. It is essential to consider the ease of fundraising, the protection of minority shareholders, and the simplicity of managing day-to-day operations. A thorough analysis of the legal and fiscal implications of each option is therefore indispensable before finalising the SPV’s incorporation.

Integration of VAT and Corporation Tax

The management of taxation, particularly Value Added Tax (VAT) and Corporation Tax (IS), is a fundamental aspect of setting up an SPV. For VAT, the SPV can generally recover VAT on its investments (materials, works) and remit it on the sale of electricity, if the latter is subject to VAT. Otherwise, where electricity sales are exempt, the SPV may opt for taxation to recover input VAT. Regarding Corporation Tax, the profits generated by the SPV will be subject to this regime. It is possible to optimise the tax burden through accelerated depreciation or other tax provisions provided by current legislation. Tax planning must be integrated from the structuring phase to anticipate cash flows and maximise project profitability. A good understanding of tax rules helps avoid unpleasant surprises and secure returns for investors. It is often wise to consult experts to ensure compliance and tax optimisation.

IFRS deconsolidation criteria for large groups

For large groups investing in solar via SPVs, International Financial Reporting Standards (IFRS) play an important role, particularly concerning deconsolidation. The objective is often to structure the SPV in such a way that it is not consolidated in the parent group’s accounts. This avoids burdening the group’s balance sheet and presents a more favourable financial position. The deconsolidation criteria under IFRS are strict and primarily concern the degree of control exercised by the group over the SPV. If the group does not hold the majority of voting rights, or if it does not have the power to direct the financial and operational policies of the SPV, the latter may be deconsolidated. The absence of consolidation can have a significant impact on the group’s financial ratios, such as net debt. It is therefore crucial to properly structure the SPV taking these standards into account from its creation, often in collaboration with accounting experts specialised in renewable energy project financing.

The legal and fiscal structuring of an SPV is a complex process that requires specialised expertise. It aims to create an optimal legal and financial framework for the solar project, while protecting the interests of all stakeholders. Rigorous planning allows for anticipating challenges and maximising long-term benefits, ensuring that the SPV operates in compliance with current regulations and applicable accounting standards, such as those of the Caisse des Dépôts.

The role of the SPV in managing PV project risks

The establishment of a Special Purpose Vehicle (SPV) is a key strategy for isolating and managing the inherent risks of a solar energy project. By creating a distinct legal entity, the financial and operational risks of the project are separated from those of the parent company. This allows for better visibility and more targeted management of potential hazards.

Isolation of financial risks from the parent company

One of the main advantages of the SPV is its ability to compartmentalise financial risks. If the photovoltaic project encounters difficulties, such as payment delays or unforeseen costs, these problems remain confined to the SPV. The parent company is therefore not directly exposed to these financial losses, which protects its overall financial health. It’s a bit like having integrated insurance for each project.

Mitigation of exposure to technical and legal risks

Beyond financial aspects, the SPV helps control technical and legal risks. For example, construction and maintenance contracts are entered into in the name of the SPV. If technical problems arise, such as equipment failure, it is the SPV that manages claims against suppliers or constructors. Similarly, issues of permits, regulatory compliance, or land disputes are managed by the SPV, thus limiting the parent company’s exposure to these complexities. Public-private joint ventures operate on a similar principle of separation of responsibilities.

Risk pooling across multiple operations

In some cases, a corporate structure may hold several SPVs, each managing a distinct solar project. Although each SPV isolates the risks of its specific project, the parent structure can sometimes benefit from a certain degree of pooling. For example, insurance contracts or financing agreements can be negotiated on a larger scale, potentially under more favourable terms. This allows for optimising risk management across the company’s entire portfolio of solar assets.

Interaction between the SPV and other stakeholders in the photovoltaic project

The establishment of a Special Purpose Vehicle (SPV) involves close collaboration with a multitude of stakeholders. The success of a solar project, whether small or large-scale, depends on good coordination between these different parties. Each stakeholder brings their expertise and resources, thus contributing to the viability and performance of the installation.

Collaboration with lenders and investors

Lenders and investors are at the heart of the SPV’s financing. They provide the capital necessary for the construction and operation of the plant. The SPV must present them with a solid case, demonstrating the project’s profitability and security. This includes detailed financial projections, risk analyses, and the presentation of key contracts, such as Power Purchase Agreements (PPAs). The trust of financial partners is paramount to securing financing. Banks, for example, carefully assess the debt-to-equity ratio, which reflects the SPV’s level of indebtedness. A well-balanced ratio, often around 70-80% debt for mature technologies like solar, is generally sought.

Key financial stakeholders include:

• Commercial and investment banks.
• Investment funds specialising in renewable energy.
• Institutional investors (pension funds, insurance companies).
• In some cases, crowdfunding platforms for smaller projects.

Relationship with the parent company and shareholders

The SPV is often a subsidiary of the company initiating the project. The parent company plays a key role by providing its technical expertise, market experience, and potentially, a portion of the equity. It may hold a majority or minority stake in the SPV. The relationship between the SPV and the parent company is governed by agreements that define responsibilities, financial flows, and governance. The parent company benefits from the profits generated by the SPV once expenses and debt repayments are made. It can also group several SPVs under its umbrella, thereby pooling risks and benefits. It is important to clearly define the parent company’s strategic objectives regarding its stakes in SPVs, particularly in terms of capital allocation and return on investment. Understanding the Special Purpose Vehicle (SPV)

Coordination with technical service providers (EPC contractor)

Engineering, Procurement, and Construction (EPC) are generally entrusted to specialised service providers. The SPV must carefully select a reliable and experienced EPC contractor to guarantee construction quality and adherence to deadlines. Coordination with the EPC contractor is essential throughout the development and construction phases. This includes supervision of works, management of technical approvals, and acceptance of installations. EPC contracts are often complex and must cover all technical aspects, guarantees, and penalties in case of delay or defect. The SPV ensures that the installed equipment meets expected performance and durability standards. Institutional actors in the sector, such as regulatory agencies, also play a role in defining technical and environmental standards.

The SPV acts as an orchestra conductor, harmonising the contributions of each partner to successfully complete the solar project. Clear communication and rigorous contract management are the keys to fruitful collaboration with all stakeholders, from financiers to technicians.

The process of creating and implementing an SPV

The establishment of a Special Purpose Vehicle (SPV) is a structuring step for any large-scale project in the solar sector. It is not limited to a simple administrative formality; it is a methodical process that requires rigorous planning and coordination between different stakeholders. The objective is to create a distinct legal entity, specifically designed to carry the assets and risks of a given solar project, thereby facilitating its financing and management.

Key steps in legal and financial structuring

The creation of an SPV involves several distinct phases, from initial design to final contracting. These steps are designed to build a solid and sustainable structure.

1. Defining the project scope: This involves precisely identifying the assets that will be held by the SPV (land, panels, inverters, insurance contracts, maintenance contracts, etc.) and the expected revenue streams (electricity sales, capacity guarantees).
2. Choosing the legal structure: The legal form of the SPV (SAS, SARL, etc.) must be selected based on the shareholders’ objectives, tax constraints, and local regulations. This choice has direct implications for the company’s governance and taxation.
3. Structuring financing: This phase consists of defining the mix between equity and debt. It involves negotiation with banks and potential investors to obtain the necessary financing. The financial setup is often the cornerstone of an SPV’s success.
4. Drafting shareholder agreements: These agreements define the rights and obligations of the different shareholders, decision-making procedures, and rules for exiting the capital.
5. Implementing operational contracts: This includes Power Purchase Agreements (PPAs), Operation & Maintenance (O&M) contracts, and the necessary insurance to cover technical and commercial risks.

Aligning the financing plan with project parameters

A well-designed financing plan accurately reflects the intrinsic characteristics of the solar project. It must take into account several determining elements to ensure long-term financial viability.

• Project time horizon: The lifespan of photovoltaic equipment and the duration of electricity sales contracts directly influence the debt structure and repayment schedule.
• Risk profile: The level of risk perceived by lenders and investors (technological risk, market risk, regulatory risk) dictates the cost of capital and the acceptable debt ratio. Proven technologies, such as those certified by the C2P Green List, tend to reduce this risk.
• Nature of revenues: Guaranteed and stable revenues, for example from a fixed-price electricity purchase contract, allow for a higher debt leverage than with more volatile revenues.
• Operating and maintenance costs: Forecasted expenses related to the operation and maintenance of the plant must be realistically integrated into the financing plan to avoid any cash flow strain.

An SPV’s ability to attract external financing, particularly via project finance, largely depends on the robustness and credibility of its financing plan. This plan must demonstrate a clear capacity to generate sufficient cash flows to cover operating expenses, debt service, and offer an attractive return on investment to shareholders.

Importance of a solid and secure business plan

The business plan is the reference document that details the strategy, financial projections, and assumptions on which the SPV is based. Its quality is crucial for convincing financial partners and ensuring efficient project management.

• Detailed market analysis: Understanding the solar energy market, regulatory developments, and competition is essential.
• Realistic financial projections: Revenue, cost, and cash flow forecasts must be based on solid and verifiable assumptions.
• Risk identification and mitigation: A thorough analysis of potential risks (technical, financial, legal, environmental) and the measures put in place to mitigate them is expected by investors.
• Exit strategy: Although often addressed later, thinking about exit options for investors can strengthen the project’s value proposition.

Impact of the SPV on solar investment strategy

The establishment of a Special Purpose Vehicle (SPV) profoundly changes how investments in the solar sector are considered and structured. It allows for a more targeted and optimised approach.

Optimisation of capital allocation

One of the major effects of the SPV is to enable better management of financial resources. By isolating a solar project within a dedicated structure, companies can allocate capital more precisely, without diluting the overall performance of their main activity. This means that funds invested in solar are clearly identified and their profitability measured independently. For companies looking to diversify their assets or meet environmental obligations, the SPV offers a clear framework for these specific investments. This can also facilitate the adoption of models such as third-party investment, where an external investor covers initial costs, thus transforming significant capital expenditures into more manageable operational costs. This approach frees up funds for other strategic initiatives.

Improvement of project financial performance

The SPV is designed to maximise the financial performance of the solar asset it holds. By focusing solely on operating the plant, managing revenues from electricity sales, and repaying debts, the SPV aims for maximum operational efficiency. The cash flows generated are directly allocated to debt service and shareholder return on investment, which makes the project more attractive to lenders and investors. The financing structure, often based on project finance, ensures that debt is backed by the project’s future revenues, thereby reducing risk for financiers. Operating expenses (OPEX) are also rigorously managed to preserve profitability.

Acceleration of return on investment

By compartmentalising risks and facilitating access to external financing, the SPV helps accelerate the return on investment. Solar projects, which require significant initial investment (CAPEX), can thus be financed more quickly and under potentially more favourable conditions. The clarity of the SPV’s legal and financial structure reassures investors, who may be more inclined to inject funds. Furthermore, optimised management of contractual aspects, such as Power Purchase Agreements (PPAs), helps secure long-term revenues, offering increased visibility and reducing uncertainty regarding the timeline for recovering invested capital. The objective is to make solar projects more competitive and encourage faster deployment of clean energy production capacities, thereby contributing to the energy transition towards clean solutions. New regulations, such as those modifying the tariff framework, also push for a re-evaluation of economic models, where the SPV can help adapt more agilely.

Regulatory and contractual considerations for an SPV

The establishment of a Special Purpose Vehicle (SPV) involves dealing with a precise regulatory and contractual framework. It’s not just about building a power plant, but also ensuring that all administrative procedures and agreements are in order. It’s a bit like preparing a complex file before being able to launch the project.

Compliance with energy and environmental regulations

Even before thinking about construction, it is necessary to ensure that the project complies with all current laws. This includes environmental standards, which are becoming increasingly strict, and regulations specific to the renewable energy sector. For example, new laws may require the installation of solar panels on certain types of buildings or car parks [52c4]. It is therefore essential to stay informed of legislative developments to avoid any unpleasant surprises.

• Compliance with urban planning and construction standards.
• Obtaining necessary environmental permits.
• Taking into account local and national regulations on energy production.

The regulatory framework is constantly evolving. Active monitoring is therefore necessary to adapt to new requirements and anticipate changes that could impact the project.

Management of electricity purchase contracts (PPA, OA)

Once the plant is built, the electricity produced must be sold. This is where electricity purchase contracts, such as Power Purchase Agreements (PPA) or Feed-in Tariffs (OA), come into play. These contracts define the sales conditions, price, duration, and guarantees. The decree of 6 October 2021, for example, specifies the conditions for benefiting from the feed-in tariff [a563]. Negotiating these contracts well is vital for the project’s profitability. It is necessary to ensure that the terms are clear and that they protect the SPV in the long term.

Compliance with regulatory authority requirements

Regulatory authorities, such as the Energy Regulatory Commission (CRE), play an important role. They may impose specifications during calls for tenders, for example, by requesting a share of the capital to be offered to local residents [1af6]. It is therefore necessary to understand and respect their requirements for the project to be validated and to benefit from support mechanisms. Article 175, for example, modifies certain contracts related to electricity production support mechanisms [1af6].

For your SPV project, it is essential to fully understand the rules and contracts. This may seem complicated, but we are here to help you clarify things. If you have any questions about the legal aspects or agreements to sign, please do not hesitate to contact us. Visit our website to discover how we can support you in your endeavours.

In brief: the SPV, a key tool for your solar projects

To put it simply, the SPV, or Special Purpose Vehicle, is a bit like creating a new company just to build and manage your solar farm. It allows for a clear separation of the project’s finances from those of your main business. This is super useful when you want to involve banks or other investors, as it makes things clearer for them and limits risks for everyone. Essentially, the SPV helps organise all the financing and management, especially for large projects, and it simplifies things so that solar electricity can reach us without too much hassle.

Frequently Asked Questions

What is an SPV and why is it used in solar projects?

An SPV, or ‘Special Purpose Vehicle’, is a company created specifically for a solar energy project. Imagine it as a small team solely dedicated to building and operating a solar power plant. It’s used to separate the project’s finances from those of the company that created it, much like putting a project’s affairs in a separate box to prevent problems in one from affecting the other.

How does an SPV help manage the risks of a solar project?

The SPV acts as a shield. If the solar project encounters financial or technical difficulties, these are the SPV’s problems, not the parent company’s. This protects the rest of the business. Furthermore, if the SPV borrows money, banks primarily look at the solar project’s ability to repay, not the company’s other activities.

Who invests in an SPV and how is it financed?

The company launching the project initially invests money (equity). Then, to finance the construction of the plant, the SPV can borrow money from banks (debt). Sometimes, other investors can also buy shares in the SPV, or crowdfunding platforms can help raise funds.

Is creating an SPV mandatory for all solar projects?

No, it’s not mandatory for all projects. For very small projects, the company can manage everything itself. But for larger projects, those that are expensive or require many financial partners, the SPV is very useful. It makes it easier for new investors to get involved and for large loans to be secured.

What is the role of the SPV once the solar plant is built?

Once the plant is built, the SPV is responsible for operating it. It sells the electricity produced, collects the money, pays the bills (maintenance, insurance, etc.), and uses the revenues to repay loans and remunerate investors. Essentially, it manages the day-to-day operation of the plant.

How is the SPV created from a legal perspective?

To create an SPV, an appropriate legal form must be chosen, such as a Public Limited Company (SA) or a Simplified Joint Stock Company (SAS), depending on the country and project size. It is also necessary to ensure that tax rules (such as VAT and corporation tax) are properly adhered to, and sometimes specific accounting rules must be followed if it is a large company.

What are the advantages of using an SPV to attract investors?

The SPV makes the project more attractive to investors because it clarifies the situation. It clearly shows what the project’s assets are, what the expected revenues are, and how risks are managed. This reassures banks and investors, who are more inclined to lend money or invest in a well-structured project that is isolated from the company’s other activities.

Does the SPV have to manage all technical aspects of the solar project?

The SPV is responsible for the smooth running of the plant, but it doesn’t necessarily do everything itself. Often, it calls upon specialised companies (such as an EPC contractor) for construction, maintenance, or operation. The SPV, in turn, supervises these service providers and ensures that everything goes as planned, remaining the main point of contact for investors and lenders.