Solar farms without subsidy sprout from Britain to Italy

Bloomberg

Next to a wheat field north of London, banks of solar panels in 35 neat rows are generating electricity without any support from the government.
Despite Britain’s reputation for grey skies, the closely-held developer Anesco Ltd. is building the hybrid solar and battery facility in Milton Keynes with its own capital. It’s just one of about 15 photovoltaic projects underway from Italy to the UK that aren’t relying on subsidies to make a profit, according to Bloomberg NEF, which anticipates many more to come.
European nations are leading the way because they were among the first to back solar farms with above-market power prices and tax breaks in the early 2000s. That triggered a global manufacturing boom and 80 percent plunge in the cost of installing photovoltaics. Now, governments are cutting incentives as prices drop, and renewables are competitive with fossil fuels in more places.
“The change has come about because many governments believe that support is no longer necessary for the mature technologies which have seen significant cost reductions,” said Michelle Davies, head of clean energy and sustainability at the law firm Eversheds Sutherland LLP. “They take the view that the sector is sufficiently advanced to enable the market to find its own solutions.”
In Germany and Spain, incentives in the form of feed-in tariffs for solar electricity made it easy to anticipate how much each project would earn. That gave investors and bankers comfort enough to write loans to the industry.
Now, developers are starting to build plants that don’t rely on those mechanisms. Their costs are low enough that they can profit from selling power at the market price or by arranging
a long-term power-purchase agreements, or PPAs, with big industrial consumers. Seeking a greener energy footprint, companies from AT&T Inc. to Facebook Inc. and Apple Inc. have been prominent buyers of PPAs. Those arrangements are used as security for banks lending money for construction costs.
“Corporate PPAs will be a key tool,” said Matt Setchell, head of energy at Octopus Investments Ltd., a renewables investor in London. “Clearly subsidies aren’t going to be around
forever.”