How to evaluate investments in solar energy via Crowdfunding

How to evaluate investments in solar energy via Crowdfunding

Making money while making the world a better place is not a utopia it is currently mainstream. 

By investing in solar farm projects via crowdfunding people can make up to 10% simultaneously fighting climate change and making Europe more energy independent. 

But how to make sure that the project will not fail and you will get your returns and green energy will be produced? 

To evaluate the solar farm investment project Crowdinform defined 4 questions to which you need to have answers before investing. 

How much energy will solar farms be able to produce?

Usually, you see that farm production capacity is stated as “kwp” which is the peak power of a PV system, but since the sun is not shining 24/7 actual output will be substantially lower. 

It is a very complex question therefore if this information is not presented in the deal description ask your crowdfunding platform to provide it.

If you want to double-check you can use the European Commission's “photovoltaic geographical information system” where you can calculate PV panels output based on location, type etc. (https://re.jrc.ec.europa.eu/pvg_tools/en/)

Will the project will be able to sell produced energy and for how much?

Solar farms can produce a lot of energy but will they be able to sell it? In most cases, the farm will sell energy to the grid based on the so-called  Power purchase agreement (PPA) which usually defines how much energy will be purchased, for which price, and agreement maturity. 

If the company does not have such an agreement yet, ask for an explanation and assurance that such an agreement will be signed. 

Will the company generate enough funds to repay your loan?

At this point, you know how much the company will produce and how much it will be sold. 

You need to understand how much is annual operation and maintenance costs. 

Here once again you will need to ask the platform to provide you with estimated data.

When you have it 

Produced energy (kw/h) p.a. * price EUR/kw/h – annual O&M costs – loan service costs 

If the result is above 0.00 EUR it means the company is reached break-even, but remember some reserves are always needed.

Note: Across 13 sources, the range in average lifetime OpEx for projects built-in 2019 is broad, from $13 to $25/kWDC-yr. Source: pv-magazine.com

Will management be able to deliver?

Delivery of solar farm projects is a complex task, therefore when it comes to picking up investment projects you need to understand how qualified is a team delivering that project. 

Check team experience and evaluate do they have delivered such projects in past and how successful they are now.

We at Crowdinform are trying to provide you with tips on how to make successful investments!

But remember your crowdfunding platform is your key partner and it should provide you with all answers and details! 

We wish you a successful investing