Utilities and infrastructure funds have been the key buyers of photovoltaic installations in 2011, as highlighted in BNEFs latest report, released today. The report is called "The Solar Portfolio Hunters: Focus On the Acquisition and Valuation of Solar Assets".
The renewable energy analysts found that as the pace of new projects have slowed, largely as a result of diminishing incentives in Europe, project developers have been selling completed projects, rather than keeping them as long-term assets on their books. Of the 3.9 GW of projects acquired globally, 2.8 GW were already completed and feeding electricity into the grid. The remaining 1.1 GW were permitted but not yet under construction.
Big deals featured in the 3.9 GW, as set out by the report, include three projects in Italy worth 242 MW and First Solars 550 MW Desert Sunlight Solar Farm in California.
Falling subsidies and also the high cost of finance have driven down the prices paid for photovoltaic projects, report author Pietro Radoia found, which have fallen by 44 percent since its peak in 2008.
BNEF also makes note of the falling cost of PV, by three quarters since 2008, and the falling LCOE from PV installations, which also fell by 30 percent in 2011 alone.
Michael Liebreich, the CEO of BNEF said that assets developed during the PV boom in Italy and Spain are generating attractive cash flows and are being purchased by investors and utilities as fewer new large-scale projects are under development. "These firms have a high cost of capital and many would prefer to recycle what funds they have into new projects. They are selling to longer-term investors with a lower cost of capital, who are happy with returns of between five percent and 15 percent, depending on the country concerned, over 20-25 years."
Liebreich concluded: "PV projects can be a very attractive product for this type of investor, at the right price."