Economy

Solar experiences boom as purchases climb 122% in 2011

Published

12 years ago

July 19, 2012

Blue & Green Tomorrow

A record $10.8 billion (£6.9 billion) was spent on new solar power projects in 2011, according to Bloomberg New Energy Finance (BNEF), with continental Europe and the US at the forefront of the surge.

The figure is a 122% increase on 2010 purchases. Italy was the most active nation, buying 540 megawatts (MW) of installations, whilst the US accounted for the top five deals in terms of capacity.

Overall, 3.9 gigawatts (GW) of solar was purchased worldwide in 2011, with the cost per MW working out at around $2.8m (£1.8m).

“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 BNEF.

“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.”

One of the projects that propelled the US to the forefront of the surge was the 550MW project being developed in California by MidAmerican Solar and First Solar. This, the companies say, will become the “world’s largest solar project”, and once completed will provide power to 160,000 homes in the state.

And 2012 has continued in a similarly positive vein it seems. Only yesterday, we reported on a $200m (£128m) Jordanian solar project that was being funded by a Chinese developer.

More broadly in the renewables field, two recent reports published last month say that investment in the sector reached a record high globally last year, with $257 billion (£165 billion) put towards clean energy projects – six times the amount invested in 2004.

Blue & Green Tomorrow’s recent Guide to Limitless Clean Energy will give you more information into the financial opportunities behind renewable power, as well as providing expert insight into the sector’s exponential growth.