Is the avalanche of money that was chasing renewable energy projects before the coronavirus crisis rolling on or grinding to a halt?

The headlines still show plenty of deals closing. Developers are clinching power-purchase agreements, assets are changing hands and it appears that new projects are still getting off the ground.

But are these simply announcements for deals that were effectively already over the finish line before the coronavirus crisis erupted? Or are the wheels of renewable energy financing still turning?

COVID-19 has fragmented the finance outlook for the renewable energy market in the U.S. and Europe, experts say. For those with cash ready to invest, lower project valuations may offer a unique opportunity. But debt-backed deals look to be slowing on both sides of the Atlantic, and some say the supply of legacy deals is drying up.

“No one is really stepping up and reaching financial close on new deals,” said Jatin Sharma, president of GCube, an insurance provider for renewable energy projects. Sharma said his firm sees a large percentage of the renewables deals that get done in the U.S. and Canada. “I can say that most deals are dead right now,” he told GTM.

“Maybe deals that were lingering in February and March have gone through without too many issues,” Sharma said. “But right now, whatever you’re hearing from banks and lawyers saying, ‘But deals are still happening; we’re still working’ — I’m just not seeing it.”

Others see more positive signs in the market.

Some of the biggest tax-equity providers for U.S. renewables, including Bank of America and JPMorgan, claim they’re as active as ever before, industry sources say. Big and well-capitalized developers seem to have little problem accessing the funding they need, reflecting strong underlying demand for quality renewables assets.

On April 9, Engie announced an up to $1.6 billion tax-equity package from Bank of America and HSBC covering as much as 2 gigawatts of renewables. On April 17, developer sPower announced it had secured $350 million of tax equity from Wells Fargo for what will be the largest solar plant ever built east of the Rocky Mountains.

But many smaller developers will struggle to secure tax equity this year, which could force the sale of projects or result in outright cancellations.

NextEra Energy, the leading U.S. renewables developer, has all the tax equity commitments it needs for its massive 2020 construction program, executives said last week

“That is not the case necessarily for smaller developers,” said John Ketchum, chief executive of NextEra Energy Resources, the company’s renewables development arm. “Smaller developers might struggle, particularly to the extent that banks have less…taxable income.”

“It could create project M&A opportunities for us,” Ketchum added, “where some of these smaller developers need a rescue plan because they’re going to be running up against issues at the end of the year.”

The renewables sectors are pushing hard for deadline extensions for their federal tax credits, but the path forward looks increasingly treacherous. The premium for projects not in danger of missing that cutoff will be significant. 

European wind and solar deals keep moving

Meanwhile, in Europe, deals are still closing, and investors that do not need to rely on debt for projects are expected to do well.

“We’re as busy as ever,” said Jérôme Guillet, founder and managing director of Green Giraffe, a financial adviser to the renewables industry. “There are a few delays on deals…and it’s not always obviously virus-related. We are still seeing closings. We expect to announce others in the near future.”

Banks are sounding a negative tone but that may be part of a strategy of trying to “talk their margins up,” Guillet told GTM. “In practice, they are still lending and [interest rates] have not moved as much as maybe they’d like. Liquidity is still good.”

“It’s true it’s not the best time for racy new stuff, but ‘normal,’ solid transactions will get good interest and commitments on terms that are not so far from before the crisis.”

On Monday, the listed fund Greencoat U.K. Wind bought what will be the country’s largest onshore wind farm from the Swedish energy giant Vattenfall for £320 million ($398 million). The 240-megawatt South Kyle project in Scotland will also be one of the largest unsubsidized onshore wind projects in Europe.

Technical advisory DNV GL said it’s working on several equity-funded deals that it expects to close during the coronavirus outbreak, rather than after the market shifts closer to something approaching normality.

“It is very much indeed a buyers’ market,” said Michael Dodd, director and market area leader for DNV GL’s U.K. business. Certain types of investors are “flocking to renewable energy projects,” Dodd added.

“They are still considered to be relatively safe and reliable projects to invest in due to lack of change in the fundamentals that support — such as subsidies — and a perception that the crisis might accelerate the energy transition,” said Dodd.

While the total number of likely buyers has fallen, those left have deep pockets, and when they view the market, they like what they see, he said.

“The energy market and macro uncertainty might impact valuations, meaning buyers have more strength to take advantage and bid down against where [prices] may have been pre-COVID-19,” he added.

In Europe, like in the U.S., debt is where the slowdown is most notable, industry figures say. And it is new projects, rather than deals that were already in the pipeline or project refinancings, where the sluggishness is most pronounced.

Tom Heggarty, principal analyst at Wood Mackenzie’s energy transition practice, said there’s a wait-and-see attitude among lenders.

“There are some banks that are sitting on their hands at the moment in terms of progressing decisions around financing new projects,” Heggarty said.