Allianz buys Italian solar park despite retroactive cuts

The 8MW farm was acquired by the insurer’s renewables fund, with CIO Armin Sandhovel saying feed-in-tariff cuts would not hit returns.

Allianz Global Investors’ equity team has bought the 8-megawatt (MW) SiSen Italian solar park in Puglia, despite recent retroactive cuts to tariffs in the photo-voltaic (PV) sector and heightened regulatory instability.

The transaction, closed for an undisclosed amount, was done on behalf of the €150 million Allianz Renewable Energy Fund (AREF), which owns solar assets across Europe. This is AREF’s seventh deal since December 2013. In November, it bought two German solar parks with a 55-megawatt (MW) generation capacity. 

The news was first reported on Infrastructure Investor's sister website Low Carbon Energy Investor.

Despite regulatory instability in the country, Allianz Global Investors chief executive officer Armin Sandhovel seemed happy with the project’s prospects: “Our investment targets are return-strong projects which already price-in regulatory risks like these. This also applies to the Italian PV market, which caused negative headlines during recent months due to its implementation of retroactive feed-in cuts. Projects like SiSen nevertheless meet our high expectations.”

An Allianz spokeswoman declined to elaborate on how project returns will be affected by the cuts or what they are expected to be.

Recently, the Italian government gave solar investors the change to either accept a straight feed-in-tariff reduction of between 6 percent and 8 percent for the duration of the subsidy period, or take a bigger hit in exchange for receiving feed-in-tariffs for a longer period of time.

Rating agency Fitch considered “all options to be credit negative for Italian solar PV plants as they effectively result in lower annual cash flows”. It added “the risk of further regulatory intervention in renewables in Italy remains”. The retroactive solar cuts are part of the government’s plan to help reduce consumer’s electricity bills in the crisis-hit country by 10 percent.

Still, deals continue to close in the Italian solar sector. On Wednesday, French fund manager Antin Infrastructure Partners clinched a novel €165 million refinancing package for seven of its Italian solar plants, securing both institutional investor and bank capital.