Fitch Ratings, an organization that makes a speciality of credit score scores and analysis, says solar persistently outperforms wind power amongst world renewable energy project scores, in keeping with an up to date evaluation from the score company.
“More than a decade of analysis shows that solar resources are consistently more stable and predictable than wind, resulting in less volatile revenues and generally higher ratings,” says Andy Joynt, senior director at Fitch. “Wind, by contrast, does not measure up.”
Wind project efficiency can endure as a result of the technical problem of forecasting sources typically results in overestimated power manufacturing. Additional challenges can embrace gear points, prolonged durations of decrease pure useful resource and issue isolating exact causes for underperformance in particular tasks and bigger portfolios. As a end result, 89% of wind tasks have annual manufacturing ranges beneath their preliminary P50 forecasts.
By distinction, 86% of solar tasks analyzed by Fitch have been inside 5% or higher of their authentic P50 ranges. Only 7% have been considerably beneath these preliminary forecasts. Fitch’s rated universe contains 69 issuers depending on wind or solar project operations in 12 international locations. Nearly half of those tasks are positioned in Latin America, whereas 40% are positioned in North America and 12% in Europe.
Despite principally dependable solar manufacturing, solar tasks noticed extra downgrades than upgrades in 2019 as a consequence of weakened income counterparties. This development, a reversal from typical years and principally restricted to the U.S., highlights the significance of counterparty credit score high quality for renewables tasks. Widespread wildfires in California took their toll on a few of the state’s largest utilities. Because power buy agreements are bilateral contracts the place income is absolutely depending on the creditworthiness of their off-takers, a project’s income stream could be no stronger than the off-taker’s credit score high quality. That sort of publicity could not exist in different international locations the place counterparty danger is usually thought-about to be systemic.
Among wind tasks, Fitch notes rising publicity to service provider power gross sales at prevailing market costs globally. Merchant danger tends to be concentrated in later years of the project when there’s much less certainty over market costs, making it tougher to foretell revenues.
The full report, “Global Renewables Performance Review: Solar Continues to Surpass Wind,” could be discovered here.