Investment risks of utility-scale PV: Opportunities and limitations of risk mitigation strategies to reduce uncertainties of energy yield predictions

Investment risks of utility-scale PV systems may arise from a wide range of sources: political stability in a region, interest rate levels and currency exchange rates or future energy price. However, the presence of stable political and economic conditions and feed-in tariffs or power purchase agreements may limit interest and price risks to acceptable levels. The technical risk of deviations between expected and actual life-time energy yield of a PV power plant is mostly influenced by the quality of energy yield predictions in case that system components correspond to their datasheet and guaranteed values and the maintenance concept is applied as expected. Recent publications estimate the standard uncertainty of life-time energy yield predictions to about 8%, which directly contributes to overall investment risk. In this paper we analyze two different strategies to reduce the influence of uncertainties of energy yield predictions on investment risks. The first strategy is diversification of risk, i.e. investing in a portfolio of systems. The second strategy is related to adjusted investment periods. It is concluded, that both strategies as well as the combination of these strategies are able to significantly reduce uncertainties. The resulting uncertainty of the lifetime energy yield for the combination of both approaches is estimated to about 3%.