Q&A: Why banks must rethink energy loans

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Banks are warming to solar, but they still don’t fully understand the sector. Many treat solar loans like standard debt, ignoring long inventory lead times and rarely offering adequate grace periods, Waringa Matindi, CEO of Village Energy in Uganda, told Renewables Rising. While interest rates are lower than typical loans, they remain high for the sector.

• “Structuring payments monthly or even quarterly is difficult because of the long lead times between ordering inventory and making sales. This timing issue means the repayment schedule often doesn't align with our cash flow cycle. This is why many solar companies may opt for quicker, non-bank financing, even if the interest rates are higher,” said Ms Waringa.

• While she appreciates the sector’s progress and supportive policies, she stresses that regulations must keep pace with technology. For instance, tax exemptions for standard inverters encountered challenges when hybrid inverters were introduced.

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