Chinese solar companies, some already heavily indebted, will need to raise many billions of dollars this year to fund a big expansion in capacity, a major test of investor confidence in a sector hit hard by the global financial crisis.

Beijing last month announced a solar installation target of 17.8 gigawatts (GWs) for 2015, up 70 percent on the previous year, to boost the use of renewable energy and prop up China’s solar panel industry, the world’s largest.

Industry experts say that will entail total investment from big state-owned enterprises and debt-laden private businesses of over $23 billion, most of it from state banks, and the domestic debt and equity capital markets.

Chinese banks, however, remain wary after writing off billions of dollars via a wave of defaults and plant closures in the sector when European demand for Chinese solar products collapsed during the euro zone debt crisis.

“We will only provide limited support to the sector,” said a top executive of a northern provincial branch of Industrial and Commercial Bank of China (ICBC).

Many of this year’s installations may be small-scale solar projects such as rooftop generators, experts say, which would make financing more tricky than for utility-scale solar farms.

Even so, solar industry executives say bankers and investors are showing signs of growing interest in the industry.

There is, after all, huge potential, as Beijing is talking about boosting solar capacity to 100 GWs by 2020, up from 26.52 GW of grid-connected solar power at end-2014.

“We have noticed a significant improvement in the financing environment for solar this year,” Eric Luo, chief executive of Shunfeng International, a private major Chinese solar panel maker and plant developer, told Reuters.

Shunfeng, which is doubling its domestic solar generating capacity to 3 GWs this year, signed a framework agreement in February with the ICBC on a potential credit line of 20 billion yuan ($3.23 billion) for solar development.

VOLATILE BET

Others have also found funding.

Officials at privately controlled solar panel maker Trina said the company had teamed up with a trust unit of insurer Ping An to develop 1 GW of solar power projects over the next three years, with Ping An taking up to 49 percent in each project and providing bridge financing.

Trina and other panel manufacturers, like JinkoSolar, are also planning to spin off their power plants for overseas listings to raise capital, while GCL New Energy has agreed to issue $100 million in convertible bonds to Goldman Sachs.

The industry, still heavily dependent on subsidies and hamstrung by infrastructure bottlenecks, remains a volatile bet, however.

Major state firms have less problem securing loans from state lenders like China Development Bank, industry experts say. But smaller players find it hard to secure credit and have to turn to trust firms and financial leasing companies, which charge annual interest rates of 8-15 percent, compared with less than 6 percent for China’s one-year benchmark rate.

Experts also cite a lack of confidence in the profit outlook for solar power plants, which in theory deliver returns of 10-15 percent under long-term power purchase contracts with state utilities but in practice face problems with subsidy collection and panel quality, among other things.

“For most solar developers, banks are not going to give them money unless they have collateral or find loan guarantors,” said Wilson Li, a manager at the trust unit of state-run investment firm Guolian Group, which is involved in solar financing.