With so many places on earth where photovoltaic power plants could be built, it is not always immediately obvious where the best opportunities are for investors or project developers. For instance, lack of sunshine in one country may be compensated for by a high feed-in tariff. For a first-look, crude comparison of two opportunities, projects may be scored on 5 dimensions: Irradiation, tariff, system performance, capital expenditure and a general assessment of political stability & local knowledge of the team.
If shown as an area in a graph, the ideal project has an area that is large and balanced around the center. If the area is mostly in the top half of the diagram, the project has great potential revenues, but may never be built because of costs and political risks. On the other hand, if the area is mostly in the bottom half of the diagram, the project may be safe to build, but won’t generate a lot of cash.
In the graph below, we are comparing two ficticious projects in northern Germany and Tunisia. Furthermore, the modules in Tunisia are mounted on a tracking device, resulting in higher system performance because the tracker allows the system to catch more of the available irradiation. Also, annual irradiation in Tunisia is twice as high as in Germany. On the cost side, however, the tracking devices adds to the price. Finally, the success of a project and its prospects for investment very much depend on country-specific aspects such as political stability of the law governing renewable energy, ease of doing business and getting permits as well as local knowledge. Here, a project in Germany would definitely score much higher than in Tunisia.
The areas of both projects in the graph are of similar size – they both have merits. However, they are also both slightly imbalanced: Irradiation in Hamburg may be too low while political risks may jeopardize the project in Tunisia.
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