Please note that for our new segment, E-mobility, parts of our risk assessment have been specifically adapted. Mainly the areas regarding track record and pipeline have been assessed in a different way than how we normally do for borrowers in the Commercial and Industrial solar sector. We have not created a new credit risk model for this new segment yet, which is why we want to highlight that there have been some adaptions from our standard credit risk model. This applies to one borrower at this point, Bisedge Limited, where their first loan at Trine became available in September 2021.
Solar for business and industrial applications, as opposed to residential solar installations, is known as Commercial & Industrial (C&I) solar. In addition to businesses of different sizes, ranging from larger corporations to local small businesses, customers in the C&I segment also include governments, schools, and nonprofits, to name a few.
Commercial solar projects may be installed on rooftops of buildings or mounted on the ground and can range widely in size, from as small as 10 kilowatts to megawatts. As commercial solar customers often rely on the grid to run their operations, solar is used as a supplement to the grid electricity supply by providing electricity at a lower cost during the daytime. Hence, it generates clean and affordable electricity and reduces operating costs.
Commercial and Industrial (C&I) solar borrowers are assessed using a credit rating tool that Trine developed for the C&I sector. The purpose of the rating is to give an overall indication of our assessment of the solar partner’s ability to repay their loans.
Below are the areas and weightings we assess that result in a score ranging from 0-100.
32.5% Financial Performance
We analyze a minimum of 2 years of operations and 1 year of audited financial information. We review their revenues, costs, cash runway, liquidity and leverage ratios to gauge their ability to service debt.
20% Shareholders and Corporate Governance
Our focus is on assessing the quality of shareholders and their ability to inject further capital should the need arise. In addition, we also review the quality of the risk management and board of directors.
10% Pipeline and Track Record
We look at the ‘Total Active Installed Capacity’ (KW), the level of unpaid invoices on installed systems (collection efficiency), the risk relating to the company’s existing clients and project pipeline.
10% People / Management
We review the experience and competence of the management team, the quality of the leadership, as well as organisational structure, potential gaps in key positions and employee motivation.
10% Financial Management
We analyse their debt repayment history, sources of debt and equity, seniority of Trine’s debt, additional guarantees, quality of the finance function, foreign currency risk mitigation and credit enhancement tools.
10% Operating Environment and Competition
We assess the operating environment in which the partner operates. This includes country risk, as well as factors incentivising the use of solar energy, the regulatory framework and competition.
7.5% Processes, Controls and Systems
This includes the customer screening process, IT integration, technical capacity, level of in-house skills, insurance coverage and system warranties.
The final score corresponds to a rating according to the following breakdown. This is the rating that is presented to Trine investors.
*Please note that Trine does not invest in companies that rate below B-
It’s important to note that some uncertainty is always present in these calculations and these ratings do not represent any kind of guarantee. Your capital is at risk, returns are not guaranteed and you should never invest more than you can afford to lose.