Investing in solar energy

With the current global financial and economic crisis, which might be of a longer duration, investments such as in stock markets, real estate and bonds tend to be much more volatile and risky than previously, so it is natural to look at other, more secure investment opportunities.

The heightened awareness of the market for renewable energy and the increased political goodwill bring solar energy in focus for both short and long term investments.

There are many good reasons for this:

• State guaranteed tariffs and an indexed settlement over 20  years
• A high return of minimum 12-14 % per year of the total investment
• Producers guarantees and insurances, which safeguards the installation and the daily operation
• Almost no moving parts and thereby very low maintenance costs
• A transparent and limited risk
• Tax depreciation in Demark  many times faster than the lifespan of the plant
• Cash Flow surplus from year one

In Denmark windmills were a little unfamiliar and uncertain as investment objects right up to the late 1990ies, and many banks were reluctant to get involved. Later, as we now know, it has developed completely differently; where it is now difficult just to find wind turbines to invest in.

We have seen examples of second hand wind turbines being sold at a much higher price than the equivalent new ones, because over time the government phases out their subsidies for new plants. In the same way, we predict solar parks to follow a similar path, only with a considerably shorter initial phase, since the wind turbines as a green energy investment, so to speak has been a kind of breakwater for the solar energy.

As it was the case with wind turbines, it is wise to be somewhat at the forefront in a new growth market, and invest while government support is at the upper end of the scale.