This month’s edition of the AHA Investor magazine features an article on solar energy by Corality’s Chairman and Head of Consulting Nick Crawley. In the article, ‘Solar flair – review of current trends in solar power’, the 2nd in a series of several articles for AHA, Nick presents an overview of his insights into one of the hottest topics on the renewable energies’ radar.
Transition from fossil fuel to solar technology
Over the past decade solar energy has developed drastically. It is now a well understood and proven technology and, in comparison to biofuels, it represents a low risk investment from a financier’s perspective due to its homogenous nature which makes it easier to assess and bank. The transition from fossil fuel to solar power is largely facilitated by:
- continuous technology developments,
- increasingly de-risked economies of scales,
- rising fuel prices – making traditional power more expensive, and most importantly by
- an increased public awareness to a company’s socio-environmental footprint, resulting in more companies looking for cleaner and greener ways to raise brand awareness.
Coupled with government promotions for great investment opportunities, these key points make solar power more promising than ever.
After the initial boom of solar energy projects in Europe, the world market is experiencing a positive pipeline of solar projects in China, USA, Australia and Africa. Their geographical location and investment conditions make these countries the hot spot for solar energy projects.
Key risks when assessing solar projects
Though government backing of solar projects is overall positive, the financial viability of these projects is subject to the availability of low cost project finance debt funding. In his article Nick outlines the key risks that financiers will review to assess a typical solar project. When preparing a financial model all of these requirements need to be accounted for and the driving parameters clearly understood and calculated.
- Technology risk
- Off-taker risk
- Construction risk
- Country/Political risk
- Government incentives
- Single asset risk
As a competitive alternative to fossil fuel, solar energy is the focus of a lot of recent project investments. Advancing technology ensures future solar generation will no longer be considered an expensive technology as the decrease in per unit cost will reduce dependency on government subsidies.
Corality works with Dii (Desertec), GE WIND, Acciona, KFW Ipex, Start Energy
Over the years Corality has developed a large client base and extensive expertise in the renewable energy sector. Clients include GE Wind Energy, Acciona, KFW Ipex, Star Energy, Relivit and JatEnergy. We are proud to be involved in a wide range of large scale solar energy projects like the €400 billion Desertec project and the Australian Solar Flagship programme.
Realising the increased pressure for corporate responsibility and recognising the success factors of solar energy while evaluating the risks in strategic and transparent financial models allows Corality to be at the forefront of renewable energy projects. Or as Nick Crawley, Corality’s Chairman and Head of Consulting, says: “This is a welcome phase shift in the energy sector, solar is a technology that leaves a small footprint – it is good for the world!”
Read the full article in the AHA magazine, out in the shops now.