Evaluating Solar Investments: Don’t Take Everything at Face Value

Full article available on Greentech Media.

Investors in U.S. solar projects should be ready to question the assumptions developers have made. They may be too good to be true.

In recent years the U.S. solar market has gone from a fledgling industry to a booming one. The Energy Information Administration expects solar to rank behind only natural gas in terms of new plant capacity added through 2050. Naturally, investors are flocking to the space.

But getting involved with an emerging technical asset class has its risks, particularly as the growing economic competitiveness of solar has pushed developers to get even more aggressive on pricing assumptions.

A new report, with contributions from firms including DNV GL, kWh Analytics, SunPower and PV Labs, aims to shed light on the financial uncertainties associated with solar production. Taken together, their data-driven conclusions show solar investments aren’t infallible.

Instead, analysts say potential investors should be ready to question the assumptions solar developers make about project dynamics like expected production and residual value when financing and building a project.