Mark Wakeford is Chairman of EvoEnergy, Strategy Director of the Global Solar Council, Chair of the West Midlands Solar Taskforce and host of The Building Podcast. This article draws on his conversation with Nik Stone, an independent environmental and social risk adviser working with the International Finance Corporation.
Every solar and battery scheme we build needs finance. The larger ones are funded by institutions with a real appetite for renewables, but that appetite only exists because clean power delivers returns and, as with all institutional capital, it only moves when the benchmarks are met on returns, covenant strength and risk mitigation.
I wanted to understand that world better, so I sat down with Nik Stone for a recent episode of the podcast. Nick is one of those rare people: a chartered environmentalist who has spent nearly twenty years advising banks on renewable investments around the world. Much of his work is with the International Finance Corporation, part of the World Bank Group, and before going independent he spent years at British International Investment, the institution many of us still think of as CDC.
He is, in other words, exactly the person to give an objective view of how money moves, and how we unlock more of it for solar.
Key takeaways
- Bankability is not one test. It’s the aggregate answer to several parallel due diligence workstreams, commercial, technical, environmental and social, all asking whether a project is viable enough to back.
- Two frameworks govern most international renewable lending. The Equator Principles set how banks themselves operate; the IFC Performance Standards set how an individual project is assessed.
- Capital is largely not the constraint. The bottleneck is the pace at which developers can get projects to a bankable state.
- Front-loading environmental and social work pays back later. The money you spend understanding a site early is recovered when the project reaches a credit committee.
- Skills belong in the bankability conversation. Better-trained people build better assets, and better assets carry less risk over a 10 to 20-year loan.
- Emerging markets are underserved, not unattractive. Country-level risk is too often treated as binary, which stalls genuinely good projects.
What does “bankability” actually mean?
Bankability is the aggregate answer to a set of parallel due diligence questions asked about a project, commercial, technical, environmental and social, that together determine whether a lender or investor can get comfortable backing it.
I’ve always thought Nick’s corner of the industry is a fascinating one, because it’s fundamentally a translation job: taking what is actually happening on the ground and turning it into something a credit committee can price. This risk isn’t really a risk. That one is, and here’s what it costs to mitigate it. Converting reality into pounds, shillings and pence.
As Nick put it, bankability is a very broad term covering a number of workstreams within a transaction. Every investment a bank or development finance institution looks at runs several of these in parallel, and in aggregate they’re all trying to answer the same question: is this project viable across all the dimensions we need to view it from?
That’s the frame worth holding on to. When a project stalls, it’s rarely because “the bank said no”. It’s because one of those workstreams surfaced, something nobody had planned for.
Who is actually in the room?
The financing ecosystem is layered, and the layers do different jobs.
Multilateral institutions like the World Bank typically work at government level first, electricity market reform, regulatory architecture, the groundwork that makes a market function. That de-risks the whole system. Only then can the private-sector arm, the IFC in that example, start having individual conversations with sponsors and project owners to actually make things happen.
Nick made a point I think gets underappreciated: it’s one system, with work to be done at both ends. Sorting out whether government-backed power purchase agreements are enforceable is not abstract policy work. It’s the thing that tells a private developer they will get paid for the power they produce. Without that, nothing else matters.
For commercial banks, that de-risking is what makes an unfamiliar jurisdiction approachable at all. Some investors simply don’t have the institutional risk appetite for certain markets, that decision is genuinely binary. Others can get comfortable, but the question becomes how they price the risk, and whether the project’s commercial model still works once that price is applied.
These two frameworks come up constantly in international project finance, and they’re often conflated. They’re related, but they do different things.
The Equator Principles are a voluntary set of principles adopted by commercial banks, more than 120 financial institutions worldwide have signed up. They give a uniform approach to how signatory banks conduct environmental and social risk management on transactions. Predominantly a project finance framework covering debt, though used more broadly in practice. Crucially, they govern how the bank operates.
Why sign up voluntarily? Because, as Nick explained, banks have watched projects go well and go badly, and a meaningful share of the historical failures, across many energy technologies, not just renewables, trace back to a misunderstanding of environmental and social risk. The Principles bake rigour in from the start. They are, at heart, a risk management tool, refined over more than twenty years and several iterations. There’s also a practical efficiency: when two signatory banks sit in the same transaction, they’re immediately speaking the same language.
The IFC Performance Standards are what the Equator Principles reach for when it comes to assessing a specific project. There are eight:
Apply all eight to a project and you’ll have covered, or at least rigorously interrogated, more or less everything that could become a significant impact or a serious problem.
One clarification worth making, because I asked: these are standards, not law. National legislation always comes first. In some jurisdictions, complying with local law will get you most of the way to the Performance Standards anyway. In others, the Standards sit meaningfully above what legislation requires, and if you want financing from an institution that has adopted them, meeting them is not optional.
Why does early environmental and social work pay for itself?
Because the value of the work is realised later, at the point you engage banks, procure contractors and go out to build.
There’s an understandable reluctance to spend heavily on assessment before you know a project will proceed. The developer carries that risk, and it’s real. But Nick’s argument, and I agree with it, is that a sensible and proportionate amount of that work up front means that by the time you’re in front of a lender you’ve already identified, planned for and mitigated the things that could otherwise become problems.
And this genuinely isn’t a developing-market issue. It manifests differently in different places, but understanding what community concerns are likely to be is exactly as necessary in the UK as it is in Africa or Asia. Anyone who has watched the local response to a large solar park in the English countryside knows that. Doing that inquiry, and doing it well, at the outset is a value-adding process. It is not a box to tick.
Do banks still price solar like bricks and mortar?
This is the question I most wanted to put to Nick, because it’s a frustration I hear regularly in the UK market. Banks have long assessed investments the way they assess property, a yield on something they consider relatively low risk and thoroughly understood. Solar and storage have a different risk profile from anything in that mental model.
Nick is more optimistic than I expected. The larger multilateral development banks carry industry specialists in-house whose job is to stay abreast of the technology and the market, and that intelligence can be plugged into any transaction. Smaller institutions can’t always carry that, but if they’re thoughtful about how they use external engineering and technical advisers, they can access the same understanding.
His point cuts both ways, and it’s the part worth remembering: you don’t want to miss a risk, but equally you don’t want to be so conservative that you decline a project, or overprice it, because of something you simply didn’t understand. Good advice protects against both errors.
Has the scale of projects changed the picture?
Enormously. Nick has watched 25 and 50MW solar and wind projects go from being considered large to being unusual. Projects above 100MW are now commonplace, and gigawatt-scale is in view. Nobody, he suspects, would even consider building a 25MW wind project today. Battery technology has been central to that shift, particularly for solar.
That raises an obvious worry: does the appetite for large projects leave smaller schemes stranded?
His answer was that development finance institutions do try to accommodate the full spectrum. Large projects are attractive because you deploy a lot of capital and get a lot of megawatts at once. But there are other routes to smaller-scale renewables, solar home systems being the clearest example. Rather than funding each installation, you back a company with genuine track record and market credibility, often taking an equity position, and scale arrives through their customer reach instead.
Aggregation has always been the challenge in our sector, and it remains one. Every project is slightly different, and they rarely arrive on the same timescale. Even in the UK market, bundling projects into something large enough to reduce the cost of finance is hard. Standardisation of project development and finance has been the holy grail of this industry for as long as any of us have been in it, and it hasn’t fully arrived yet.
If capital isn’t the constraint, what is?
The Global Solar Council’s ambition is to move from around 2TW of installed solar today to more than 8TW by 2030, alongside a target of 300 million homes and small businesses running rooftop solar and storage. So I asked Nick directly whether the finance sector has the bandwidth.
His answer was clear: capital, in aggregate, is probably there. The constraint is the pace at which the sector can bring projects to a standard that matches the expectations of incoming finance.
That takes us straight back to bankability. How quickly can developers, collectively, get projects to a place where they can be considered bankable? Development is slow, difficult work, and it front-loads enormous effort into a stage nobody outside the process sees.
Nick made an observation I’d encourage every lender to sit with. A bank looking at a project in 2026 is often looking at something a developer started working on in 2023, sometimes considerably earlier. The person across the table has been at this for years. And you’ll still find points where the standard isn’t quite met and there’s more work to do.
The encouraging news is that the gap is closing from both directions. Projects are bigger, which helps with scale. Due diligence has quickened, because developers now have track records to lean on and banks have institutional knowledge built from thirty, forty, fifty transactions of the same type. They get comfortable faster. It’s never perfect, there’s always something to work through, but the two sides are converging.
What about revenue certainty as renewables displace fossil fuels?
I put a harder question to Nick, and he was honest enough to say he doesn’t have a crystal ball.
Renewables now have the lowest levelised cost of energy of any source. Early solar projects sold power priced against fossil fuel generation. As renewable volumes grow worldwide and we come off that high-cost basis, the value of energy sold into the grid could well fall. How do funders solve that?
His answer was straightforward: contracted demand. It matters to equity investors in the development platform and it matters enormously to lenders over the life of the loan. What happens beyond that horizon can be projected, but you can’t rely on projections in an individual transaction. What you can rely on is the offtake agreement in front of you today.
It’s one of those crystal balls we all wish worked. None of them see far enough ahead.
Where do skills fit into all of this?
This is a subject Nick and I have discussed at length outside the podcast: whether a skills standard belongs alongside the existing frameworks.
Labour and working conditions have always featured in the Performance Standards. Taken hierarchically, the first duties are obvious, people must be safe, and people must be paid. But if the objective is improving the performance and resilience of an asset over decades, the capability of the people working on it is fundamental. Better-trained people, properly supported to develop, feed value back into the project.
That matters especially where we’re installing solar in a region for the first time. Get the installation skills right and you leave behind the capability to maintain the asset too. Investors should care about that intensely, because it determines whether the plant keeps generating at the capacity it was designed for. Standards should keep pace with what we now understand drives resilience, and I’d argue human capital is a large part of that answer.
Nick’s call to arms: look harder at emerging markets
I finish these conversations by asking for a call to arms, and Nick’s was pointed at developers and financiers alike.
The untapped potential, and the growth projections, sit heavily in Africa and parts of Asia. There has been an understandable hesitancy from commercial capital about those markets. But country risk and macro risk get treated as binary far too often. Look at the macro picture and it seems difficult and complicated, so you stop there.
Get into the detail of individual projects, Nick argues, and you find genuinely smart sponsors who have thought hard about the risks on their own projects. Top-tier teams, carrying an additional layer of burden that stops an otherwise good project from moving as fast as it should.
I’d second that entirely. Looking at the calibre of people I work with through the Global Solar Council from those markets, they are there precisely because they solve problems exceptionally well. There are pearls to be had.
What this means for the rest of us?
What I took from this conversation is that the finance sector is doing more to raise standards across our industry than it’s usually given credit for. The Equator Principles and the IFC Performance Standards provide continuity and guardrails, and properly enforced standards raise the quality of what gets built, which, in a pleasing circularity, reduces the risk that made the standards necessary in the first place.
The appetite to reach 8TW is there. The capital is largely there. What we owe the sector in return is a pipeline of projects that has done the hard thinking early: understood its site, its community, its offtake and its people before anyone asks the question.
That’s what makes a project investable.
Frequently Asked Questions
What does bankability mean in solar project finance?
Bankability is whether a project is viable enough for a lender or investor to back. It’s determined by several parallel due diligence workstreams, commercial, technical, environmental and social, that together establish whether risks are understood and adequately mitigated.
What is the difference between the Equator Principles and the IFC Performance Standards?
The Equator Principles govern how signatory banks manage environmental and social risk across their transactions. The IFC Performance Standards provide the project-level toolkit for assessing a specific investment against eight thematic areas. The Equator Principles reference the Performance Standards for that granular assessment.
Are the IFC Performance Standards legally binding?
No. They are standards, not legislation. National law applies first. However, meeting them is effectively a condition of finance from institutions that have adopted them.
Is the main barrier to solar growth a lack of capital?
Not primarily. Capital is broadly available in aggregate. The tighter constraint is the rate at which developers can bring projects to a bankable standard, given the multi-year lead times involved in project development.
Why does early environmental and social assessment matter for financing?
Because it identifies and mitigates issues before they reach a credit committee. Doing proportionate assessment work during development means fewer surprises during due diligence, faster progress to financial close and a lower risk of costly problems during construction and operation.
About the Author
Mark Wakeford is Chairman of EvoEnergy bringing decades of experience across engineering, construction and renewable energy. He plays a key role in shaping EvoEnergy’s long-term strategy while contributing to the wider development of the UK solar industry, with particular focus on skills, supply chain resilience, industry standards and the transition to net zero.
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