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Guest post by Mark Wadewitz, Advisor at DW Capital.
As fund managers and investors look at rubble of the old dinosaur of the European solar market, they shouldn’t rush to switch industries. No, they should double down their efforts and focus on large scale solar projects in Southern Europe.
In fact, it can really be said the best is yet to come. The new market is not a dinosaur and in 60 countries it is already the cheapest energy (Bloomberg New Energy Finance).
Solar is even being described by some commentators as “ridiculously cheap” and this is a huge shift that we haven’t yet fully comprehended. Former critics are also turning their heads incredulous.
So then – the obvious question is – where does solar make sense?
Where do investors make good-risk related returns? The response is, in my view, Portugal.
A good investment in large scale solar should be located where you can find the following conditions:
- Legally stable country (Western European country, preferably without a large solar tariff burden);
- Abundant excellent solar resources;
- High Energy Prices;
- Market with interconnections (Brussels wants cross-border links to equate to at least 10 percent of a nations power generation capacity by 2020, and in Portugal this is expected to create an opportunity to add 8GW of potential solar capacity).
The future looks bright in Portugal because there is little “solar legacy”, which is a plus on the legal stability side.
In Spain 4,667 MW of solar has been installed and in Italy and France 18,910 MW (https://en.wikipedia.org/wiki/Solar_power_in_Italy), and 6.73 GW respectively. In Portugal less than one half of a GW has been installed, just 450MW have been installed.
Spain, Italy and France have all suffered revisions in the solar tariff “burden” owing to generous subsidies and large capacity installed. Portugal’s solar industry hasn’t seen any revision because it only placed a small bet on solar, however, and going forward, solar will have to compete in the market.
The Portuguese government was right to wait until solar was affordable, now it is up to the industry and investors to prove the government right.
Get the chance to win 1-year of access to Green Dealflow’s Transaction Database (normal price of 3.600 EUR). 3 winners will be announced on LinkedIn during January.
