Why Invest in Solar Energy and the Risk Involved

The upside:

With the current global financial and economic crisis, which might be of a mush 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 temporary 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 13-20 % per year of the investment - IRR
• Producers guarantees and insurances, which safeguards the installation and the daily operation
• No moving parts and thereby very low maintenance costs
• A transparent and limited risk with non-recourse loans from A rated Banks
• A security Bank Bond or Bank guarantee to the Investor in the building period
• Cash Flow surplus from year one

The downside:

There are of course risks with any investment – even how small it may seem, we don’t deny that fact. So also with Solar Power with Government support.

The biggest one we see is not the Hardware or the yearly production of Power but mainly political - if the Government retrospectively changes existing conditions.

We have seen attempts on that in Spain, and the UK market is currently trying to “adjusted” the FIT system from April 2010, to some concern for Investors and Banks.

The Market in the UK have decreased tremendously sense then.We also see the Italian market on a shaky trip due to the political uncertainty there.

So far no Government has however had any success in retrospectively actions.