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The British company Welink Energy Portugal 2 UK, which owns Solara4, the largest solar power plant in the country, has entered insolvency proceedings, according to a report published this month by consultancy BDO, cited by the weekly newspaper “Expresso” (source in Portuguese). The case concerns a large-scale project in the Algarve region with 219 MW of installed solar capacity, according to the Welink Group website (source in Portuguese).
Located in Alcoutim, Solara4 has been in operation for five years, having been inaugurated in 2021, but has been facing a series of setbacks. According to the same report, since quoted by several national media outlets (source in Portuguese), this solar plant “has been through a combination of operational and market challenges that have adversely affected its performance and cash flow generation”.
The document further states: “Electricity production has consistently fallen short of initial forecasts. At the same time, the Iberian energy market has seen significant growth in solar generation capacity. This increase in supply has driven down wholesale prices, which at times drop to zero or into negative territory.” Due to the confluence of these factors, “revenues have been lower than expected”.
However, as reported by “Expresso”, disputes between the British company and the contractor, China Triumph International Engineering (source in Portuguese), a subsidiary of a Chinese state-owned industrial conglomerate, as well as fires and other technical problems, have also hampered Solara4’s operations.
Despite this turbulent trajectory, the “Jornal Económico” (source in Portuguese) reported in 2024 that Welink had decided to “hybridise” the solar plant, through a €400 million investment to boost solar capacity while also adopting wind power and battery storage solutions.
The initial idea was to enable uninterrupted electricity production by installing a further 50 MW of solar capacity, 264 MW of wind power through 40 turbines and a 100 MW battery energy storage system (BESS), for a “total of more than 600 MW of installed capacity upon completion”, according to the Welink Group’s own website.
However, the ambitious project received an unfavourable opinion from the assessment committee led by the Portuguese Environment Agency (source in Portuguese) (APA), which considered that it would not be “compatible with safeguarding the environmental values present in the affected area”. The plan was later revised, cutting the number of planned wind turbines to just over half, and was put out to public consultation. However, the APA has not taken any definitive decision on the matter.
All this came after Solara4 had already been close to being sold. And indeed, within the insolvency process now under way, the priority, once again, is to find new investors willing to buy the asset, the weekly “Expresso” further reports.