As the proliferation of renewable energy continues across Europe, U.S. and several emerging markets, such project initiatives are gradually losing their niche status and becoming more commonplace, according to fresh industry research.
In its first examination of the renewable energy infrastructure space, Fitch Ratings said the sphere is being led by solar energy projects that “consistently outperform” wind power on a global scale.
However, despite their increased acceptance, renewable revenues remain “inherently volatile” since the resource in question is outside of the project’s control, the rating agency added. Nonetheless, asset performance for solar projects has been more consistent even though their track record is shorter.
A solar panel array in Albuquerque, New Mexico, U.S. The solar power industry in the U.S. has boomed in recent years, making it more competitive with other forms of electricity generation. (Photo: Susan Montoya Bryan / AP)
Fitch Director Andrew Joynt believes solar projects are demonstrating lower operational risk, better generation performance and lower volatility. “Solar projects also tend to meet or exceed initial volume estimates while wind projects more often underperform against expectations.”
Solar projects are also outperforming wind projects from a ratings perspective, he added.
Fitch has upgraded 19% of its rated solar projects compared to 1% for its for wind projects. Additionally, the agency has downgraded 12% of the wind projects. All of the downgrades were down to underperformance compared with expectations.