Silicon Valley Bank Collapse Weakens Global Renewable Energy Initiative

The collapse crises around Silicon Valley Bank (SVB) has raised questions around the availability of capital for the clean energy sector. 

The Bank is reputed as a major actor in the space to-date including with Sunrun, Leap, AES, Cypress Creek Renewables and other developers.  

The bank went into receivership last week after customers withdrew deposits en-mass leaving it with a negative cash balance. The Federal Deposit Insurance Corporation(FDIC) quickly stepped in and transferred all deposits and all assets to a new ‘bridge bank’ entity – Silicon Valley Bridge Bank – allowing customers’ business to continue uninterrupted. 

But the collapse has raised questions for the 1,500 clean energy companies it has worked with, and the plethora of renewable energy and energy storage projects it has financed including some 62 per cent of all community solar in the US.  

While the FDIC’s move appears to prevent any short-term fallout, the long-term effect on the availability of capital, specifically tax equity, has divided opinion.  

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Banking sources interviewed by S&P Global, for example, mostly said that other financial institutions would be more than willing to step in and take on existing loans and fill in the void left by the bank for future deals.  

However, the Bank’s collapse may reinforce the perception amongst some that both the cost and scarcity of capital are increasing, according to Ted Brandt, CEO of investment bank Marathon Capital.