Utility-scale solar energy has become one of the most attractive asset classes in infrastructure investing, offering predictable long-term cash flows, falling technology costs and strong policy support across most major markets. But returns vary significantly by geography, and choosing the right market is as important as choosing the right project.
What Makes a Good Solar Investment Market?
The key variables for solar farm investment returns are solar resource (how much sun falls on the panels), electricity price (what the power can be sold for), grid access (whether the power can be delivered to buyers), regulatory stability and the availability of government support mechanisms such as feed-in tariffs, contracts for difference or power purchase agreements.
Top Markets for Solar Returns in 2026
Spain and Portugal: Southern Europe offers exceptional solar resources combined with relatively competitive permitting processes and a liquid power market. Corporate PPAs are well-established, and falling costs mean projects without subsidy support are increasingly viable on merchant terms.
Chile: Chile’s Atacama Desert offers some of the world’s highest solar irradiation levels, and the country’s competitive electricity market and improving grid connectivity make it one of the most compelling markets for unsubsidised utility solar globally.
India’s growing energy demand: India’s scale, improving regulatory environment and ambitious government targets make it one of the most active large-scale solar markets globally. Returns are competitive, though currency and counterparty risks require careful management.
Australia: High electricity prices and excellent solar resources make Australia attractive for large-scale solar, particularly projects paired with battery storage technology targeting the premium market for dispatchable renewable energy.
Key Risks to Monitor
Grid curtailment risk — where solar generation is wasted because the grid cannot absorb it — is a growing concern in markets with very high solar penetration. Investors should carefully assess curtailment risk when evaluating projects in mature solar markets. Regulatory change risk also requires attention in markets where government support mechanisms are subject to policy shifts.
