Savills sees increasing scale of Dutch solar parks as interesting investment opportunity

According to the report ‘Spotlight: Renewable Energy – Solar Parks’ published today by international real estate advisor Savills, the growing scale of solar parks in the Netherlands and their speed of deployment, makes this sector increasingly interesting for investors who currently invest in other asset classes.

In order to achieve the climate objectives in line with the Paris Agreement, a large-scale deployment of renewable energy generation is required. This also goes for the Netherlands. The development of renewable energy is still largely dependent on subsidies, which means that the government has a key role. Positive changes in legislation and an increasing awareness of the necessity of renewable energy sources make it  inevitable  that large solar parks will be developed in the Netherlands. Solar parks are very suitable to generate renewable energy: the Netherlands has a favourable climate, an advanced electricity grid and because of decreasing costs solar energy is becoming more and more competitive compared to conventional energy.

The development of solar parks is interesting for both landowners and investors. Landowners will receive a long-term and steady flow of income, while investors will receive the right to operate a solar park with a competitive yield.

Grants will be a necessity for a while in order to fill the gap between the costs for generating renewable energy and the costs of conventional energy. This way investors will be guaranteed a stable source of income in order to make projects feasible and reduce the cost of financing, making it an attractive asset class for investors such as pension funds and multinationals who wish to diversify their portfolio as well as contribute to a sustainable future.

Friso van Heemstra, Renewable Energy Senior Consultant at Savills Netherlands, says: “The costs of renewable energy however are decreasing and therefore we expect that within two years grants might not be necessary anymore so long as they can be replaced by a long term wholesale power purchase agreement.”

At present, domestic solar park developers are the most active players on the Dutch market. However, there are many large projects in the pipeline from international solar park developers that quietly entered the Dutch market in the past few years. Several logistics companies - such as Rhenus, Segro and WDP - have also discovered the benefits of solar power and are investing in solar panels on distribution centre roofs. As renewable energy is an upcoming asset class, we can’t compare Dutch investment volumes yet, however Savills expects an increasing number of investments in Dutch solar parks in 2018.

To read more download the full report here.