Photovoltaic Farms: Economic Efficiency of Investments in South-East Poland

The main objective of this study was to identify the status and development opportunities and evaluate the economic viability of investments in large-scale photovoltaic installations in Southeastern Poland. The primary data sources used in the study were empirical materials from all photovoltaic installations implemented with support from the Regional Operational Program of the Lublin Voivodeship (ROP WL) for 2007–2013 (31 projects). The following indices were used to evaluate the economic efficiency of the investments studied: rate of return on investment (ROI), simple payback period (SPP), net present value of investment (NPV), internal rate of return (IRR), discounted payback period (DPBT), and averaged unit cost of electricity generation (LCOE). They were carried out for three scenarios–baseline, conservative, and optimistic–in two variants, for actual capital expenditures considering financial support used and without subsidies. It was determined that the expected lifetime of the studied investments would be 25 years. The sensitivity analysis shows that, regardless of the adopted scenario, investments in solar thermal power with the level of support that took place under the 2007–2013 financial perspective were reasonable long-term investments. In the least favorable scenario (conservative) included in the analysis, the discounted payback period ranged from 8.1 to 22 years. In the optimistic scenario, DPBT values ranged from 5.6 years to more than 15 years. The payback period (both simple and discounted) for investments with the subsidy was, on average, almost twice as fast as for investments without the subsidy, while the average unit cost of electricity generation with the subsidy was about 30% lower than without it.