Is There Opportunity in Redeveloping Solar Farms?

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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 S Pujari

Swarnav S Pujari

CEO @ TouchLight | Founder of The Impact

Swarnav is the CEO of TouchLight, a utility backed energy company that develops software for nanogrids that accelerates solar payback periods by 1 – 3 years. He currently leads partnerships and product efforts within the company.

Concurrently, Swarnav founded The Impact to help provide open source tools, research and analysis to people passionate about tackling climate change. He also volunteers time with ClimateLink hosting regional meetups and was appointed the Chairman for the Town of Yorktown’s CSC Task Force, where he helps with legislation and sustainability efforts within the town.

Swarnav has a background in building physical products and has been working in the energy space for about 8 years. He also holds 2 patents and is active in the tech, energy and real estate industries.

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