We like solar pv as an asset class because it has long-term, predictable revenue streams, and low operating costs. There are minimal moving parts, no raw material inputs, and no need for full-time on-site management on anything but the very largest sites.
To date, investment into solar pv on scale has been driven by the availability of government subsidies. But these subsidies are being withdrawn or reduced in most developed markets, including the UK. The UK is moving subsidy support to the solar industry from the current Renewable Obligation mechanism to the new Contract-for-Difference regime, and the implication of this change for the UK solar industry is far from certain at this time. The annual auction mechanism will almost certainly see some developers leave the industry, but in line with many other industry players we believe that returns on those projects which are developed could remain attractive.
But the outlook for the solar industry is far from bleak. Grid parity for solar power has already arrived in some markets and will be achieved everywhere in the coming years, as a result of falling costs and rising energy prices. In August 2014 Citigroup announced that they expect grid parity in the UK to be achieved by 2018.
Armstrong Energy will continue to pursue UK projects where they deliver attractive returns to investors, but we will also increasingly look to other markets to develop and manage solar pv assets where subsidies are not required, and projects can be developed and operated on a fully commercial basis.
Put simply, solar PV projects in India cost much less to install and generate significantly more energy than an equivalent power plant installed in the UK. As such, power projects in India are less dependent on subsidies than solar projects in the UK.
Armstrong Energy Global connected its first power plant in August 2014 and has commenced construction of its second project near the city of Hyderabad.
Armstrong Energy Global gives 4% of revenues and a share of profits to support the work that we are undertaking in India to help rural communities access clean energy, which will often represent the first electricity supplied to many off-grid households. These activities will be co-ordinated by the Armstrong Energy Global Foundation as a separate charitable programme.
Solar power projects in Chile benefit from high levels of irradiance and high domestic energy prices. This means that despite there being no subsidies for solar pv in Chile, projects can continue to deliver attractive financial returns.
This website is owned by Armstrong Energy Limited and is for informational purposes only, it does not constitute an offer or a solicitation to invest. Armstrong Energy Limited is authorised and regulated in the United Kingdom by the Financial Conduct Authority (FCA) (no. 612134). Armstrong Energy Limited is registered in England and Wales (no. 07991720).