Given the high demand for solar photovoltaic (PV) systems, as more homes and businesses transition to cleaner and cheaper energy sources, one local player in the renewable energy market has engineered a financial solution which will see it converting its pipeline into actual business.

On the sidelines of the recently concluded Jamaica Stock Exchange’s (JSE) 20th Regional Investments & Capital Markets Conference, FosRich managing director Cecil Foster disclosed to Our Today that the lighting and plumbing supplier inked a deal with First Global Bank (FGB) to finance the installation of commercial- and industrial-grade solar PV systems.

“We are in the market where we are supplying energy products to the Jamaican market and even the Caribbean market. Over the years we have been close to the markets, we have listened to them, and what we have found is that the energy desire of businesses has been very, very strong,” he shared.

While financing of solar PV installation is a “pain point” for Fosrich’s customer base, it is as much a hurdle for the company, too.

“Year after year we have found that two to three billion dollars’ worth of requests from various companies have been in our pipeline, and the opportunity to finance them is always not available,” Foster said, expressing his frustration.

Yet, as the adage goes, “necessity is the mother of invention”, the managing director’s need to meet client demands fuelled him to enquire about feasible solutions. While noting that First Global Bank has been an “approved financial institution” (AFI) that has financed projects on which FosRich has worked, Foster said that partnering with that bank was a perfect fit.

As part of the arrangement, FosRich will complement its installation of solar PV systems with energy storage systems (ESS). The ESS power up once the sun goes down or it can be activated for “peak shaving” by curtailing a company’s dependence on the JPS grid at the time of highest energy usage.

Commenting on the terms of the facility with FGB, Foster noted, “So the financing is for requests J$5 million and upward…to J$400 million, and the tenure can range up to 10 years. There is also a principal moratorium that can be up to 24 months, and the interest rate is single-digit, 8.5 per cent interest rate.”

While expressing satisfaction with the partnership deal struck with the commercial bank, he added that FGB will be responsible for approving the requests for financing.

Foster added: “It is very difficult for a company that wants a system that costs $60 [million], $80 million to just go and find it, especially at the rates that were existing before. But with this kind of a system, I mean this kind of a programme gives you moratorium time on the principal and gives you also a chance not only to buy solar system, but you can just energise it; I mean you can use energy equipment for lighting, outdoor, indoor lighting, all of this can be done.”

Along with the loan, companies can also access grant funding for FosRich to conduct energy audits before deciding on the best design and installation of a solar PV system.

Fosrich and FGB finalised the details of the credit facility in the week before the JSE conference. Howard Smith, FGB vice-president of corporate and commercial banking, has since confirmed the partnership with Our Today.

“We are excited to unveil this new facility with FosRich and our other energy partners. As part of the wider ESG policy from our parent company, GraceKennedy, our new energy product is intended to help companies transition to sustainable business practices. Now, medium to large corporations are able to receive comprehensive financing for the acquisition, installation and maintenance of renewable energy systems including solar panels, energy-efficient lighting and other energy-conserving technologies,” he outlined in an e-mailed response.

Converting pipeline to profit

In the meantime, Foster anticipates that FosRich will begin seeing the pipeline of deals adding to the company’s top and bottom lines over the next two months. The managing director estimates conservatively that the company will see $3 billion added in revenues from this new deal.

With a mix of MSME players and large corporate firms awaiting financing, Foster said that deals range from J$5 million to J$150 million.

In 2023, FosRich arranged a deal with microfinancier Dolla Financial to fund the installation of solar PV systems for residential customers. However, Foster informed Our Today that it has not seen much business from that partnership since interest rates have increased significantly.  

“So a lot of people kind of shy away from that kind of thing. So we have self-financed a lot of the smaller units,” he further explained.

In the company’s third-quarter (September 30) results for 2024, FosRich noted, “Our current-year numbers are affected by the substantial fall in PVC and solar panel cost on the world markets, in addition to the slowness in housing starts locally, caused primarily by the considerable increase in interest rates in Jamaica in the current period when compared to the prior year. We have not yet begun to benefit from the recent reductions in interest rates.”