Polish Renewable Energy
Polish Renewable Energy – Safe Investment of Capital
The Polish energy sector has significantly transformed recently, shifting towards renewable energy sources. This paradigm shift is driven by various factors, including environmental concerns, energy security, and the pursuit of a sustainable future. As a savvy investor, you may wonder if Polish renewable energy is a safe and lucrative investment method.
Let’s delve into the dynamic landscape of the Polish renewable energy market. Highlighting its growth potential, government support, and the underlying reasons that make it an attractive investment proposition.
Poland’s progress in the field of RES
Blessed with various natural resources, Poland has made significant progress in renewable energy. With abundant wind resources in the north and significant solar potential across the country, Poland is leveraging these renewables to reduce its dependence on fossil fuels. The country has witnessed a remarkable increase in renewable energy installations. With wind farms, solar parks, and biomass power plants popping up in the picturesque landscapes.
A stable regulatory framework
One of the key factors affecting the security of capital investments in Polish renewable energy is the country’s stable regulatory framework. The government has established clear rules and regulations that provide investors with a predictable and supportive environment. This regulatory stability reduces uncertainty and limits potential risk. Making Polish renewable energy an attractive option for risk-averse investors looking for stable returns.
Integration with European markets
Poland’s strategic location in the European Union plays a crucial role in the investment potential of the renewable energy sector. Poland has strengthened its integration with the European energy market through interconnectors and cooperation with neighboring countries. This integration offers many benefits, including access to a broader customer base, increased market liquidity, and opportunities for cross-border collaboration. Thanks to this, investors in Polish RES projects can enter the wider European market, increasing their investments’ profitability and long-term profitability.
Environmental and social benefits:
Investing in Polish renewable energy goes beyond financial benefits. This is also in line with global efforts to combat climate change and support a sustainable future. Investors can help reduce greenhouse gas emissions and promote a healthier environment for future generations by supporting the transition from fossil fuels to clean energy sources. In addition, renewable energy projects create employment opportunities. They also stimulate economic growth and increase energy security, increasing the social and economic benefits of these investments.
The most popular investment formulas when it comes to the solar industry in Poland
We will look at two attractive investment options that offer attractive returns and long-term benefits.
Option 1: Direct investment in a solar farm
In this model, your investment capital is allocated directly to constructing a solar farm. The team at Lighthief specializes in identifying suitable PV projects and overseeing the entire process, from farm construction to ongoing operation and monitoring. With our guidance, you can create a Special Purpose Vehicle (SPV) that can operate either with full disclosure or as a trust.
The cost of building a 1 MW solar farm in this model is approx. PLN 4.7 million (approx. EUR 1 million). The return on investment usually takes 5 to 8 years, depending on various factors. Primarily the number of signed long-term contracts (LPAs) for the sale of energy generated by the photovoltaic farm.
Option 2: Use of investment capital for a larger solar farm
For investors looking for greater profitability and faster returns, Option 2 presents a tempting opportunity. This approach leverages your investment capital to secure a loan to build a larger solar farm. Under this agreement, Lighthief acquires 70% to 51% of the shares, while you, as a passive investor, own 30% to 49% of the shares in the SPV.
This strategic allocation allows for larger-scale projects, resulting in increased profits. With a contribution of 30% of your investment of EUR 1 million, it becomes possible to build a photovoltaic farm with a capacity of 3.3 MW. As in Option 1, the payback period for this model is a maximum of 5 years.
Let’s now look at the financial benefits of these two investment options in more detail. Focusing on an example calculation assuming a simplified investment of €1 million:
Calculations for variant 1:
Investment: EUR 1 million
Energy sale agreement: PLN 650/MWh
With these parameters, the annual revenue is 144,000 euros, which gives an impressive return on investment of 14.4% per year. In approximately 6.9 years, the initial investment will be fully recouped. Considering that the solar farm has been operating for a minimum of 25 years, the cumulative income after 10 years reaches 567,000 euros. Over 25 years, the total accumulated income is an impressive €2,737,000 for every €1 million invested.
Calculations for variant 2:
Investment: EUR 1 million (30% contribution)
Energy sale agreement: PLN 650/MWh
In this scenario, the annual revenue is €475,000. Which is equivalent to a 14.4% return on investment per year, taking into account bank financing. Your investment pays for itself in 2.1 years, with a payback period of 6.9 years, including bank financing. Over 25 years of operation, the cumulative income, including bank financing, is EUR 2,304,000 after ten years. Interestingly, the total cumulative income after 25 years reaches an impressive amount of 10,944,000 euros for every million euros invested.
These calculations illustrate the financial benefits of investing in Polish renewable energy projects. With consistent returns and extended lifetimes, solar farms offer a safe and cost-effective route to capital investment. In addition, using bank financing can maximize your profits and shorten your payback period.
As the renewable energy sector gains momentum worldwide, Poland is at the forefront of this wave of change. The country’s commitment to achieving its renewable energy targets, backed by a favorable regulatory framework, government incentives, and integration with the European market, positions Polish renewable energy as a safe and lucrative investment opportunity. By embracing this sustainable revolution, investors are securing their capital. What’s more, are actively participating in shaping a greener and more prosperous future. So take advantage of the opportunity today and become part of the success story of Polish renewable energy!
Read about solar asset management in Poland.
Also, read about Solar Investments in Poland.
Also, about Chinese solar investors in Poland.
Read about O&M services on solar farms.