The factors that make a solar project bankable are pretty straightforward. Or maybe not.

Andrew Chen, director of the Fortune 500 bank holding company CIT Energy, offered a surprising twist to solar project development: it's possible to finance projects featuring low-quality panels.

Speaking on a panel at the Texas Renewable Energy Industries Association (TREIA) renewable energy finance forum yesterday, Chen provided his unconventional opinion. However, when asked what makes a deal financeable, Chen went through the list of obvious factors first.

“Solar and wind deals really need PPAs,” Chen began. There was nothing surprising there. “We’ve done wind financings that stretch out the terms of the PPAs and might have a slight merchant tail, but it would be a nominal amount in dollars per kilowatt-hour,” he added.

“Permitting is pretty key,” Chen went on, still holding the expected lending-institution ground. “But the lack of an environmental permit doesn’t necessarily make a project not financeable.”

That was a little outside the box for a century-old lender like the CIT Group, Chen acknowledged. But, he recalled, there was a 300-megawatt wind farm that was just financed in California. The Bureau of Land Management provided the permit, but a local Native American tribe contested it. “They made a lot of noise in the newspapers, and banks try to avoid headlines,” he said. “But the developer was able to get the financing and the controversy finally just went away.”

That wasn’t Chen’s big twist. “Interconnect is also important,” he said next, returning to conventional thinking, “because in wind, we are seeing a lot of projects that have curtailment issues, primarily in the Midwest.”

Chen's next remark definitely caught the audience's attention.

“One thing: We did two solar financings on a bilateral basis in the Northeast and we used either Tier Two or Tier Three panels. The earlier speaker, and most people in finance, would say you need Tier One panels to be financeable.”

In fact, many in the solar industry are working hard to define the highest quality modules and label them as being bankable because it is supposed to help win backing from institutions like CIT Energy.

“We may not be typical,” Chen said, “but our view is that panels are fairly plug-and-play, and, if there is a failure, you can switch them out with pretty low risk. That’s how we financed a couple of 10-megawatt projects by ourselves.”

One, Chen said, was on an Air Force base in New Jersey. “The biggest difficulty was in getting through the Air Force red tape."

An alternate perspective, from Conrad Burke of DuPont Innovalight: