The Bright Future of Solar Power Investing – April 2015

by Tom Begley

  • 02 Apr 2015
  • INF

The solar power industry and the renewable energy sector as a whole has become ever more prominent within the infrastructure asset class. Preqin’s infrastructure deals module on Infrastructure Online features extensive information on over 755 solar power deals completed globally since 2005, which represent an estimated aggregate deal value of $42bn. These deals involve a variety of investors ranging from infrastructure fund managers and direct institutional investors to industry players such as developers, contractors and other industry-specific trade investors.

As shown in the chart above, Europe is at the forefront of solar power investing, accounting for a sizeable 60% of solar power deals completed worldwide so far in 2015. Within Europe, the UK accounts for 23% of all solar power deals completed. With the continued growth of the renewable energy market, and in turn the solar power industry, it is no surprise that 60% of solar power deals completed since 2005 were at the greenfield development stage when the deal was initiated. A further 32% were at the brownfield stage of development, and the remaining 8% were assets that were already fully operational.

A number of notable transactions have been completed in the solar power sector worldwide. In June 2014, the $908mn Xina Solar Power Plant in South Africa was financed by South African commercial banks and other financial institutions including the International Finance Corporation (IFC) and the African Development Bank. Other deals include the establishment of Torresol Energy in 2008 by Masdar and SENER for an estimated $5bn. Torresol Energy's portfolio includes the Gemasolar plant, a 19.9MW facility located in Seville, Spain, as well as the Valle 1 and Valle 2 plants, two 50MW facilities located in San José del Valle.

Year-on-year, the number of solar power-related deals has increased dramatically. In 2005 and 2006 combined, just five solar power deals occurred, representing an estimated aggregate deal value of around $2bn. In comparison, in 2014, 148 transactions were completed, representing an estimated aggregate deal value of $19.4bn. This figure is likely to continue to rise as issues such as climate change and the diminishing supply of natural resources are increasing global demand for alternative sources of energy. As governments around the world attempt to address these issues, a growing number of investment opportunities are arising in the green and renewable energy sectors.

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