Last week, our ‘Financing net zero forum’ gathered to discuss the role of private capital for the next wave of solar across Europe. Joining the meeting chair, Cornwall Insight’s Daniel Atzori, were our guest panellists from a leading developer and the Global Infrastructure Investor Association (GIIA).
With the European Commission publishing its Fit for 55 package, which targets at least a 55% emission reduction target by 2030, we now have a good sense of the direction of travel. However, we still need more clarity on policies that will be put in place, with some countries in Europe still developing detailed policies and support mechanisms. Nevertheless, these policies make or break whether the EU target is achievable.
Whilst it is great to have this headline-grabbing policy, the underlying frameworks are often lacking. These frameworks will be essential to get capital flowing to enable the sheer amount of deployment required. How quickly the EU can provide this will boost confidence and act as a catalyst to get these projects moving.
With many markets for investors to get involved in, it is vital that Europe becomes as attractive as possible to attract funds into its solar developments. With the competition for the funds high, it must deliver on the policy framework as quickly as possible.
One concern is the regulatory risk investors and developers face across Europe. In the wake of COVID-19, Europe must be careful that what occurred after the financial crisis does not happen again, as this has the potential to rock investors confidence.
Discussing the routes to market across the European landscape, the use of subsidy schemes, utility Power Purchase Agreements (PPAs) and corporate PPAs for investors can complement each other. However, as countries journey through their transition, the balance of which option is preferable will inevitably change.
Regarding the most promising jurisdictions for solar, opportunities in Spain and Italy are expected to increase. An important issue will be the shift from simply increasing renewables to supporting grid stability. Ultimately, such flexibility will be a greater support to a large-scale rollout of technologies, like solar, that will be required to meet the targets set out by the EU.
For further information on our European publication Energy Spectrum Europe or to attend our next ‘Financing net zero’ forum, please get in touch with Bertie Bagge at b.bagge@cornwall-insight.com.
