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The chief executive of a company seeking to launch a solar 'yield co' investment vehicle says that retroactive cuts to support are "spreading like cancer" and claims his company's business model could offer "a last line" of legal defence.
 
PV Tech previously reported that Photon Energy, which is headquartered in Holland but was originally established in the Czech Republic, is seeking to form a holding company to attract investment into around 200MW of PV power plants across Europe. Speaking to PV Tech, Photon Energy chief executive officer Georg Hotar said that one of the main reasons for doing this was to offer legal protection to investors in the form of bilateral investment treaties. The idea being that such a treaty between a country hosting a PV plant within the EU and a non-EU country, could be an effective legal buffer against such retroactive measures, claimed Hotar.
 
Speaking to PV Tech once again, at the Intersolar Europe show in Munich this week, Hotar said that the first client was on board as an investor, but also that the scope and structure of the scheme had changed since it had been originally announced. 
 
The yield co, European Solar Holdings, aims to initially own and operate PV assets in the Czech Republic, Italy and to a lesser extent Slovakia. As Hotar pointed out, these are regions where "retroactive measures have already been hotly discussed and may be iminent in the case of Italy".
 
Hotar said the first client to join European Solar Holdings is a "local investor from the Czech Republic and it is expected to be a strong signal to others that have so far been holding back".
 
"The biggest change since we originally announced the launch of European Solar Holdings is that we will then aggregate power plants into listed holdings in several countries. Both in Italy and in the Czech Republic, a lot of potential investors told us quite clearly that they wouldn't feel comfortable contributing their plants to a multi-jurisdictional platform.
 
"They understand, or at least they believe they understand the risk of the market where they're invested (already). Investors in the Italian plants understand the Italian situation, so they are happy to invest into a vehicle that has a lot of Italian plants, but don't want to assume the risk of taking on Czech plants or whatever, which makes sense. Given the serious impact of some of the measures that have been taken, if you look at Spain for example, it's a rational concern," said Hotar.
 
"In order to address that, most likely we will set up national holdings. It will take a bit longer to acheive critical mass, but we still believe it is acheivable - about 200MW to list. That would make economic sense. Perhaps 150MW would be enough."
 
"In a market like Italy with 16GW, it sounds acheivable, in Czech Republic with 2GW, it's maybe a bit more challenging but still do-able, in Slovakia, with 450MW, we're talking about a 40%-50% market share, which may be a little bit more difficult to pull off."
 
Hotar went on to say that in his opinion, retroactive measures are spreading across a "growing number of countries...like cancer", as the support offered to renewable energy is still at a very early stage in ter ms of the maturity as a financial product. Hotar said bilateral investment treaties were a last line of defence.
 
During research for a previous article on yield cos for PV Tech's sister publication Solar Business Focus, interviewees including finance and legal experts were reluctant to give their opinion on whether or not they agreed with Hotar's view and the likelihood of European Solar Holdings being a success. One expert said however that as an unproven new idea, the only realy way to judge would be through observing its performance.

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