The rise of solar farms grid wide happened in the early 2000s and really kicked into high gear in the early 2010s.
States like California have already saturated the grid with solar power that effectively can cover most of California’s day time energy demands. However, a lot of these plants are starting to reach the end of life for equipment and more importantly the financing period for these contracts.
Recently there has been big movement in solar farm portfolio acquisitions. Recently Cypress Creek Renewables purchased and refinanced 92 MW of solar capacity which we can infer will eventually lead to redevelopment efforts around these solar farms.
Why does it matter?
- Solar farms are under 15 to 25 year contracts with utilities or with third party lenders – a lot of those farms are nearing end of life
- Panels maintain an operable life of up to 30 and in some cases 35 years. There is value for these now inefficient panels in secondary markets where space is not a constraint. Ie. Countries with no or minimal electric grid infrastructure.
- Much like how hydro power works with contract renewals with utilities, introducing similar financing and ownership approaches toward solar farms could attract more private sector investment into the space.
- The result of farms starting to finish their contractual life might revitalize the speed at which solar capacity becomes available to the grid. Efficiency improvements will yield higher output at these older farms.
What’s next?
- It is likely we will start to see more buyouts and consolidation of solar farm assets
- We suspect that there may be opportunities to roll these assets up and finance them through bonds on the public market
- The amortization of these projects will likely be extended well beyond 25 years when private groups are looking at purchasing these assets, driving cost of electricity further down
Thoughts
Stay highly attentive to the M&A activity happening in the solar space. We believe that the activity over the next year will definitely drive an emergence of a secondary or used market for solar panels.
The potential for redevelopment of these existing assets will likely drive additional lower risk capital into the market as well.
About The Author
Swarnav has over 10 years of experience in the energy & climate tech space, holds 2 patents and is active in the tech, climate and media industries. He specializes in Product/Product Innovation as well as Go-To-Market and Growth Strategy.
By training he’s a Materials Engineer with a background in research from his time at Georgia Tech and University of Illinois (UIUC).
He founded TouchLight a utility backed energy company focused on developing IP for utilities and startups pushing electrification forward. He also serves as the appointed Chairman for the Town of Yorktown’s Climate Smart Communities Task Force, where he helps with drafting legislation and enabling sustainability efforts within the town.
Concurrently, Swarnav founded The Impact to help investors, emerging founders and driven climate enthusiasts discover and identify new climate-tech startups, technologies and opportunities before they hit the traditional media sources.