Analysis sets price of global solar parks
Based on data from 69 global transactions, Deloitte has prepared an analysis substantiating what investors have been willing to pay for a megawatt from a solar park in the planning phase, under construction and for a megawatt from a solar park which has been installed. The analysis shows that investors are willing to pay approx EUR 100.000 extra for a megawatt under construction rather from a solar park in planning.
- Investors can use the figures from the analysis to acid test their investments. This can be seen in comparison to real estate developers not only knowing the price of building materials, labour costs etc., but also for the first time being given an expected selling price in different project stages based on comparable transactions, Director Troels Ellemose Lorentzen explains and continues:
- Knowing the average price of similar projects in different stages is of great help when you invest in these colossal projects. Unlike offshore wind projects where we see significant value in early stages, most value in solar parks seems to be created at a very late stage. Our analysis also shows that prices plummeted approx. ten percent the past year.
When investors determine whether the investment in solar parks in various stages of the process is worth the price, they often conduct a fundamental analysis of expectations for electricity prices, megawatt hours produced, etc. Figures in such analysis are often compared to financial ratios from few comparable transactions.
Using a large number of transaction data and regression analysis, Deloitte has designed a model which is able to provide insights to the pricing mechanism with considerable precision.
- This analysis is genuinely unique when it comes to valuation. Partly because of its extensiveness, but also because it is able to provide investors with data which they can use in their work to challenge their own valuation, concludes Troels Ellemose Lorentzen, Director at Deloitte.