Photovoltaic power generation and wind power investment risks

How risky is onshore wind & solar PV investment?

Onshore wind and solar PV investment risk is studied in Germany, Italy and the UK. Investment risk and risk premiums have declined between 2009 and 2017. Policy and technology risks have become relatively less important. Curtailment and price risks have become relatively more important.

Is solar PV a risky investment?

[With solar PV, in contrast,] replacing one or two modules only leads to a row of modules not producing electricity”. In sum, risk premiums – measured with different indicators – and investment risk decreased substantially for solar PV and onshore wind in Germany, Italy and the UK between 2009 and 2017.

Do solar photovoltaics and onshore wind technologies have a declining investment risk?

We show that risk premiums and investment risk have declined for solar photovoltaics and onshore wind technologies in all three countries. Increasing technology reliability at a lower cost, data availability, better assessment tools and credible and stable policies were crucial elements of this declining investment risk.

What are the risks associated with a commercial solar and wind project?

Risks exist at various stages of the electricity value chain. There is “resource risk” for commercial solar and wind projects—the risk that the sun doesn’t shine, or the wind doesn’t blow as much as projected, and less electricity is generated than anticipated.

Do solar PV and onshore wind financing conditions improve?

This paper makes four contributions to the field: First, we show that solar PV and onshore wind financing conditions improved in Germany, Italy and the UK between 2009 and 2017; this improvement was accompanied by lower risk assessments from investors.

Is solar PV a low-risk infrastructure investment?

While a comparable asset class in 2009 was a corporate bond of an established and listed company, today it is a low-risk infrastructure investment. The overall decline of risk premiums and the technology difference in that decline (stronger in solar PV than onshore wind) are consistent with other findings for Germany.