Investors purchased a record 3.9 GW of solar photovoltaic projects in 2011, worth an estimated $10.8 billion. This increased the gigawatt capacity purchased by 122 percent from 2010, according to new research published by Bloomberg New Energy Finance, a London-based consultancy firm.
The report examined 221 deals made from 2006 to 2011, and found that Italy was the most active market for transactions involving operating assets during 2011, totaling 540 MW purchased. 242 megawatts of this total was sold by Athens-based construction company Terna SA.
Contrasting that, however, the top five individual deals when looking only at the number of megawatts transferred took place in the US, all involving assets currently in production rather than in operation.
“The boom in solar PV in Spain and Italy, driven by unsustainable feed-in tariffs, left a pool of assets generating very attractive cash flows, and still owned by developers, manufacturers and contractors,” said Michael Liebreich, chief executive of Bloomberg New Energy Finance. “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 5 percent and 15 percent, depending on the country concerned, over 20-25 years. PV projects can be a very attractive product for this type of investor, at the right price.”
Worldwide, 2.8 gigawatts of the sales made during 2011 consisted of finished or partially completed installations, leaving 1.1. gigawatts in sites with permits, but yet to begin construction.
The valuations placed by purchasers on PV projects have dropped by approximately 44 percent from their peak back in 2008. The report, entitled The Solar Portfolio Hunters: Focus On The Acquisition And Valuation Of Solar Assets, showed that global average sale values declined from a peak 6.4 million Euros per MW in 2008 to 3.6 million Euro per MW in 2011.
“This reflected two influences,” said Pietro Radoia, solar analyst at Bloomberg New Energy Finance and co-author of the report. “First, the subsidies for the average operating plant have become less generous, and therefore the potential revenues are reduced. Second, the financial crisis has pushed up the cost of debt and equity.”