How risky is onshore wind & solar PV investment?

Onshore wind and solar PV investment risk is studied in Germany, Italy and the UK. Investment risk and risk premiums have declined between 2009 and 2017. Policy and technology risks have become relatively less important. Curtailment and price risks have become relatively more important.

Is solar PV a risky investment?

Investors ranked resource risk consistently high for onshore wind and low for solar PV – even as early as 2009. They ranked technology risk for solar PV lower over time, reflecting users’ increasing experience with solar PV and the maturing of the technology.

Is solar PV a low-risk infrastructure investment?

While a comparable asset class in 2009 was a corporate bond of an established and listed company, today it is a low-risk infrastructure investment. The overall decline of risk premiums and the technology difference in that decline (stronger in solar PV than onshore wind) are consistent with other findings for Germany.

Do solar photovoltaics and onshore wind technologies have a declining investment risk?

We show that risk premiums and investment risk have declined for solar photovoltaics and onshore wind technologies in all three countries. Increasing technology reliability at a lower cost, data availability, better assessment tools and credible and stable policies were crucial elements of this declining investment risk.

Does solar PV reduce risk?

As experience (the technology's track record) and corresponding data availability are key drivers in reducing risk, the fast deployment of solar PV in the period under study contributed to this faster risk reduction.

How does technology affect investment risk?

The risk of lower revenues or higher maintenance costs due to the technology's novelty and unpredictability (e.g., faster degradation). In the third and final step, we used a network analysis of the interview transcripts to identify the drivers of changes in investment risk.