Some 25 utility-scale solar power projects currently under construction are not "independently economically viable in a competitive market," Fitch Ratings said Wednesday.
While in some cases projects have benefited from the Department of Energy loan guarantees and the US Treasury's cash in lieu of tax credits program, Fitch said the success of utility-scale solar projects in the US is "predicated on revenue stability through long-term power purchase agreements."
"Strong solar power projects typically have a secure revenue stream over the debt term, while some exposure to subsidies does not necessarily preclude a project from achieving an investment-grade rating," the report said.
Fitch said it assessed the variability associated with the weather, and evaluated "the solar irradiance and electric output estimate provided by a solar resource consultant."
Fitch said climate change "is a potential long-term risk to all solar power projects." Authored by analyst Dino Kritikos, the report said "changes in weather patterns and climate change may meaningfully alter the solar resource" that the utility-scale solar projects rely upon.
The report also said that since the construction of utility-scale solar projects requires the use of large tracts of land usually in or near a desert, there are environmental and archaeological risks.
Solar projects require land generally amounting to six to 10 acres per MW, the report noted, and said that the 550-MW Topaz thin-film PV facility being built east of San Luis Obispo, California, by First Solar for MidAmerican Energy Holdings, is located on 4,400 acres, "or nearly seven and half acres per MW."
The discovery of historical artifacts and archaeological sites during construction can cause project-completion delays and cost increases of approximately 3%.
The report emphasized that the various utility-scale solar technologies being employed have limited long-term operational performance data associated with them, "which raises the specter that actual performance may be lower and actual costs higher than anticipated."
