Another bankruptcy: One of the largest power plants files for insolvency

The information was published in a report by consulting firm BDO, first reported by Portuguese weekly Expresso.

The “Solara4” solar park, located in Alcoutim in Portugal’s Algarve region, has an installed capacity of 219 megawatts (MW) and has been operational since 2021. However, during its five years of operation, the project faced a series of operational and market challenges that undermined its profitability and cash flow, Nuclear Perspective reports.

According to the report, electricity generation at the plant was consistently below initial projections. At the same time, overproduction and the rapid expansion of solar capacity in the Iberian energy market led to a sharp decline in wholesale electricity prices, which during sunny hours are increasingly falling to zero or entering negative territory. The combination of lower-than-expected output and price cannibalization left the plant’s revenues far below expectations.

In addition to market disruptions, the facility’s operations were further hampered by technical problems, fires at the site, as well as prolonged disputes between the British owner and the project’s main contractor, Chinese company China Triumph International Engineering.

In an attempt to rescue the project, Welink planned a €400 million investment in 2024 to transform the power plant into a hybrid energy park. The plan called for an additional 50 MW of solar capacity, 264 MW from wind turbines and a 100 MW battery energy storage system (BESS), which would have brought the total capacity above 600 MW and enabled continuous power generation.

However, the plan was blocked by the Portuguese Environment Agency (APA), which deemed it incompatible with the protection of natural resources in the area. After a revision that cut the number of wind turbines in half, the project was put out for public consultation, but final regulatory approval has still not been granted.

The insolvency proceedings now underway are aimed at finding a new investor who would take over and recapitalize the solar park.

Nuclear Perspective notes that the news comes just days after Germany’s largest solar power operator also filed for bankruptcy.

“It may be too early to speak of a ‘trend’ — but something is clearly wrong with an energy source that is supposedly the cheapest, while at the same time selling electricity in a market where power is, on average, among the most expensive in the world. Although it seems almost impossible not to be highly profitable under such circumstances, it is obvious that there are problems. And they are called ‘variability,’ ‘intermittency’ and ‘lack of dispatchability’ — factors that make the grid, which is supposed to rely on these sources, incredibly expensive and complex. In other words: without baseload power producers, there is no complex electricity system,” the outlet concludes.