The Impact of Financial Support Mechanisms and Geopolitical Factors on the Profitability of Investments in Solar Power Plants in Slovenia

Iztok Gornjak (), Filip Kokalj and Niko Samec
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Iztok Gornjak: Borzen, Power Market Operator, Dunajska Cesta 156, 1000 Ljubljana, Slovenia
Filip Kokalj: Faculty of Mechanical Engineering, University of Maribor, Smetanova Ulica 17, 2000 Maribor, Slovenia
Niko Samec: Faculty of Mechanical Engineering, University of Maribor, Smetanova Ulica 17, 2000 Maribor, Slovenia

Energies, 2024, vol. 17, issue 22, 1-13

Abstract: This article examines the impact of financial support mechanisms and geopolitical factors on the profitability of investments in solar power plants within Slovenia. The European Union’s energy policy prioritizes increases in renewable energy sources, aiming to reduce dependency on unstable and volatile fossil fuel markets. Solar power plants play a vital role in this transition. The energy policy framework also includes mechanisms and support systems to operate such facilities. This article analyzes electricity price trends over the past decade and addresses which support type—guaranteed purchase or operational support—has proven more profitable for investments in solar power plants up to 50 kW in Slovenia, considering economic and geopolitical influences on the electricity market. Although the global energy market has been affected by various significant events in recent years, it was found that the COVID-19 pandemic had minimal impact on the electricity market. In contrast, the onset of the conflict in Ukraine has contributed to rising electricity prices and has influenced the support dynamics essential for the development and sustainability of renewable energy systems. Analyses from the past decade indicate a higher return on investment in solar power plants when operational support mechanisms are chosen over guaranteed purchase support.

Keywords: renewable energy sources; solar power plants; support system; investment profitability factors; electricity price (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2024
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