Subsidy-free solar power is coming of age

New research shows that hybrid solar power and battery storage systems are coming of age. Hybrid systems are quickly becoming investable opportunities for equity investors and asset finance lenders.

Subsidy-free solar has an important role to play in the decarbonisation of the US energy system. With the rapid reductions in the costs of solar technology, the analysis shows that subsidy-free projects could start to be more widely deployed as soon as next year.

Alliance Finance Bank and renewable energy firm Anesco teamed up to commission the study from Aurora Energy Research. We wanted to look at how the returns on investment are changing for hybrid subsidy-free solar operations, in which solar power and battery storage are co-located.

Previously, uncertain returns have made it hard for solar and battery operators to raise debt finance. They have also relied heavily on government subsidies which are being phased out. These factors have limited the appeal to investors.

Now, the report shows that co-locating solar power with battery storage can unlock additional revenue streams and accelerate their deployment.

Jim Higginbotham, managing director, asset finance at Alliance Finance Bank, said: “The ability to utilise senior debt alongside equity is good news for the US renewables industry and signifies that it is a step closer to maturity.

“Until now solar and battery hybrid investments have come with high risks and uncertain returns. Our research shows that the picture is changing and with that we may well see another surge of investment in solar power as subsidy-free solar comes of age.”