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What is a Renewable Energy SPV?

Renewable energy companies often use Special Purpose Vehicles (SPVs). They are subsidiaries created by a parent company. They operate as separate legal entities with their own assets, liabilities and accounting and audit requirements.

How do SPVs work?

As SPVs are separate legal entities, they have their own balance sheet and assets. Financial reporting and filings of financial statements are also managed separately to the parent company. This makes them particularly attractive to Private Equity and Venture Capital investors looking to invest in fast-growing new technology sectors like renewable energy.

Read more about renewable energy accounting.

Benefits of using SPVs

SPVs can be attractive options for renewable energy companies, for many reasons related to balancing risk with financial returns. In particular, they may be looking to:

  • Attract new investors or funding
  • Keep different projects independent
  • Isolate financial risk (SPVs are bankruptcy-remote entities).

There are significant political, regulatory and financial risks inherent in owning, developing and managing renewable energy assets. The early exploratory stages of the project are often the most risky and SPVs are one of the tools the renewable energy sector uses to mitigate and transfer risk.

Find out more about SPVs for renewable energy

Read our guide to Renewable Energy Accounting and find out why AccountsIQ is the finance system of choice for so many renewable energy companies.