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In a new report from Bloomberg New Energy Finance, 2011 was a record year for investors purchasing PV power plants. A record 3.9GW of solar photovoltaic projects worth an estimated US$10.8 billion were acquired, a 122% increase over 2010. PV power plants in Italy and the US dominated investor’s purchasing decisions with an overall average cost per MW of €3.6 million.
“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,” noted 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% and 15%, 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.”
Not surprisingly, BNEF noted that the PV plant valuations had declined significantly due to the rapid decline in module prices. The report, The Solar Portfolio Hunters: Focus On The Acquisition And Valuation Of Solar Assets, calculated that PV power plant valuations had fallen approximately 44% from a peak established in 2008, due to the unsustainable boom in Spain.
BNEF said that that global average sale values declined from a peak of €6.4 million per MW in 2008, to €3.6 million per MW in 2011.
On a regional basis Italy proved to be the most popular market for transactions with 540MW purchased last year. However, the US dominated with the size of transactions with the five largest deals in MW terms completed in the country.
According to BNEF, approximately 2.8GW of the 3.9GW acquired in 2011 consisted of projects that either were completed and generating power for the grid, or were under construction at the time of purchase. The remaining 1.1GW of projects were permitted but not yet under construction. In the US the top five deals involved assets under construction rather than completed and operating solar parks.