Better project economics and repowering potential drives investments in late-life assets: Companies with significant development expertise like Grenergy and Statkraft are increasingly favoring acquisitions of operational projects that are over 10 years old in current market conditions. The interest in these projects stems from the fact that they secured higher subsidies and PPA prices under long-term contracts a decade ago, compared to what projects can secure today. As a result, investors are capitalizing on the better economics that older projects offer, compared to those being developed at present. Additionally, the potential for repowering these assets adds to their appeal, as it provides a more favorable route for project development compared to the existing complex and expensive interconnection processes.
Falling subsidies/PPA prices affect interest in early-life assets, while Poland stands apart: Investor interest in assets with less than 10 years of operational life has declined recently due to high valuations as well as declining subsidies and PPA prices. This has affected the economics of these projects and led to a more cautious approach from investors. However, Enerdatics has observed a contrasting surge in investment activities in the emerging Polish market. This is attributed to the higher revenue potential for these assets in the country, driven by high subsidies/ PPA prices, compared to matured markets like Germany and UK. This creates a better case for investments in these assets in Poland despite the prevailing market challenges.
The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.
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