The great solar energy crisis

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Investments in solar plants, at least in this part of the world—and in Donald Trump's United States, it's not much different—are starting to suffer . Spain, Italy, and Germany are experiencing some setbacks and a certain slowdown. The main reasons are two: falling energy prices and a particular business model. The main investors in large-scale photovoltaic have so far been large infrastructure funds, which own thousands of megawatts. Small plants are widespread but have little impact on total production. Until recently, thanks to incentives and guaranteed energy offtake prices for decades, it was possible to count on stable cash flows and assured bankability: up to 80 percent of the investment could be financed with debt, maximizing leverage and return on equity . But with low prices, everything changes.

Despite the much-vaunted grid parity (the point at which the cost of producing energy from renewables is equal to or lower than the cost of electricity purchased from the grid using conventional sources) and a theoretically competitive production cost per kilowatt-hour, few feel ready to tackle the energy market without tariff protections. The upcoming Italian auctions for contracts for difference, which guarantee a fixed price for 20 years, have finally been set more realistically (demand lower than supply), but aggressive bidding is feared . Meanwhile, too many plants continue to be concentrated in Southern Italy, in areas that are now saturated. Terna is often forced to cut production on spring and summer weekends to stabilize the grid. One possible solution is to complement photovoltaic systems with storage systems, batteries capable of storing excess energy and releasing it when the sun isn't shining. Terna will do so with new tenders for the installation of mega batteries. Private investors could also invest in this direction. But it would mean taking risks on prices and quantities: a very different prospect from the bonanza of past years.

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