How plannable is the profitability of the plants, some of which are initially supported by public subsidies, in terms of performance and current income?
Profitability and performance can remain strong in scenarios where government subsidies are not available or only available to a limited extent. In any case, grants should not serve as a supporting pillar for the financial stability of the project as a whole, but should also provide other predictable revenues.
If there are no public subsidies, the project must be privately financed completely independently through a combination of equity and debt capital. In any case, the revenue structure is of central importance. This must be based, for example, on long-term contracts with private buyers. These offtake agreements can provide cost-plus pricing that ensures a guaranteed minimum return on equity and enables stable returns through annual cost adjustments. Alternatively, tolling structures can pass on certain cost factors to the customers. An interesting possibility is to bind customers to the project through an equity investment on the one hand and thus offer the customers more purchase security on the other.
In addition, the conclusion of appropriate electricity and, if necessary, CO2 purchasing contracts within the framework of regulatory requirements, e.g. to achieve cost certainty.
Projects in high-priced electricity regions that do not benefit from (high) subsidies or substantial locational advantages will generally not be competitive. Projects in low-cost electricity regions, such as the Nordic countries in Europe, can be economically attractive even without or with significantly lower subsidies.
