"State operating support for photovoltaic projects is slowly coming to an end. A new stage is beginning, when solar power plants will be operated on purely market principles, i.e. in the form of PPA contracts," says fund manager Martin Dratva from the investment company REDSIDE, which through his NOVA Green Energy fund recently successfully completed the construction of its largest solar power plant in Csabrendek, Hungary with an installed capacity of 28.5 MWp.
In 2021, you completed the construction of one of the largest PV plants Csabrendek in Hungary with a capacity of 28.5 MW. Why did you decide to invest in Hungary? How do you evaluate this investment of your fund overall from the point of view of Q1 2022?
The NOVA Green Energy fund looks for investment opportunities primarily in the countries of Central and Eastern Europe, especially in the "V4" countries. Hungary is the right choice considering its location and in terms of sunlight. After the positive experience with the acquisition of the Barcs PV plant with a capacity of 15MW, it was a logical step in the development of the portfolio within the NOVA Green Energy fund.
Overall, after the development, construction and commissioning of our largest power plant, Csabrendek, we rate this flagship project highly positively. The project, construction and financing turned out according to expectations, and the combination of the mentioned and good lighting underpinned the solid results of this PV plant.
If it is Hungary, then the Csabrendek PV plant is already your "second addition" in this country. Will you continue to develop the solar business in Hungary in the future with the support of auctions or completely without support using PPA contracts or selling on the stock exchange at market prices, which was recently announced by another investor with "Czech roots" - Photon Energy?
Yes, we are actively looking for new opportunities in this country. State operational support for projects, whether in the form of KAT or METAR, is slowly coming to an end. In Hungary (and also in other European countries) a new stage is starting, when solar power plants will be operated on purely market principles, i.e. in the form of PPA contracts. In the past, due to low power electricity prices and high investments to build a solar power plant, such operation was not economically meaningful, but now the situation has changed and these projects already make sense from a financial point of view.
What technologies do you use at the Csabrendek PV plant in Hungary in terms of panels and inverters? In the future, will you also consider investing in new PV plants in combination with batteries?
At the Csabrendek PV plant, we use monocrystalline half-cell panels from JA Solar and inverters from Fimer. The power plant is connected to a very high voltage network, and a completely new substation is part of the power plant.
As for battery storage, for larger (utility scale) solar power plants, due to the limited lifetime of batteries and their still high cost, the financial return of such projects is lower than for projects without batteries. However, for smaller, e.g. rooftop PV, battery storage can make sense, and we currently have projects with battery storage in development.
The war and the pandemic have made PV components more expensive in recent months. Panel prices have risen by more than 70% in the last 18 months, and PV structure prices have risen by more than 80%. Will you continue to pursue new PV projects in the near future? If YES, which segments will you focus on and in which markets?
The price of increasing investment expenses is partially offset by rising purchase prices. More than the higher prices of panels and constructions, which have stabilized recently, we are more concerned about the increase in construction prices due to the significant demand for building new resources and only limited growth of installation capacities.
Anyway, we are currently analyzing several new projects. As far as segments are concerned, the fund is primarily interested in investing in solar power plants (although we are not opposed to investing in other renewable sources either), mainly in the markets of the "V4" countries or Bulgaria, Romania or the Balkans.
What is the interest of investors in investing in "green resources" now in light of the political and economic turbulence?
We are registering an increasing interest in investments, it is a natural consequence of these turbulences. It is now more obvious that in the near future there will be no more reliance on a sufficient amount of fossil resources, and from a practical point of view it is therefore necessary to invest more in green resources. On the other hand, our fund has been operating since 2014, we are not new to this industry, and we saw the potential of green resources well before the current turbulence.
In connection with the departure of "democratic Europe" from fossil fuels, especially gas, the Czech media often talk about the "premature end of the Green Deal". How do you perceive the current situation in the field of "green energy"?
The current development only supports our long-term philosophy regarding renewable sources, this direction is a necessary prerequisite in the restructuring of the energy mix of our regions. At the same time, we must not forget the instability of most renewable sources, and this restructuring must be solved comprehensively: it must be based on stable base load sources, and supplemented with alternative sources and support mechanisms, e.g. in the form of battery storage.
The last question - can you imagine the meaningful development of renewable resources without state support? Is it even worth investing in photovoltaics based solely on the market mechanism?
We can imagine it, some projects already make sense even on a market basis. Even if there were no support mechanisms in the form of, for example, the Modernization Fund, a stable business environment would sometimes be sufficient from the point of view of investment, i.e. not changing the terms of the game in the form of additional taxes, fees, burdens, regulations, etc.
