The climate gap in PV financing

As published in PV Magazine in September 2025

Some in the energy sector have suggested that a changing climate might actually be a blessing for solar power, claiming that higher temperatures will come with more sun, hence more energy. That may not be the case. Everoze Partner Nicolas Chouleur and climate expert Alberto Troccoli dive into the findings of a study conducted under the Copernicus Climate Change Service Enhanced Energy Service.

The Typical Meteorological Year (TMY) is a synthetic dataset representing average conditions at a particular location over a historical period. Using TMY is cost-effective and is widely accepted by lenders, but a growing number in the solar industry are challenging this approach. TMY fails to account for future climate evolution – critical for assets expected to operate outdoors for 30 years or more.

A common misconception is that rising temperatures will inevitably lead to more sunshine, and therefore a boost in solar generation. The reality is far more complex, as demonstrated in the results of a case study conducted by the Copernicus Climate Change Service Enhanced Energy Service (C3S), to which Everoze has contributed.

The C3S study was developed by climate change consultancy Inside Climate Service Srl, in collaboration with partners including Everoze, energy giants EDF and Enel, and French research institute Armines. C3S provides high-quality climate and energy data to support operational management and long-term planning in the energy sector. Case Study 2, led by Everoze, aimed to demonstrate how future climate projections could be integrated into solar energy yield assessments using tools like industry standard simulation software PVsyst.

Data integration

The study was conducted in two phases. Phase one consisted of a high-level assessment using monthly climate projection data for a PV plant in southern Spain. The main challenge of this phase was to integrate multiple datasets generated by the climatologists using several climate models under multiple Shared Socioeconomic Pathways (SSP) – scenarios used in climate research to explore how global society, demographics, and economics might evolve over the 21st century.

For each model, future projections were selected based on the SSP2-4.5 “middle-of-the-road” and SSP3-7.0 “fragmented world” climate scenarios. These pathways span a wide range of future emissions and policy landscapes, corresponding to +3 C and +4 C global average temperature increases by 2100, respectively. Key variables included global horizontal irradiance (GHI) in W/m², air temperature in Kelvin, and wind speed in m/s.

Those data were quality checked and integrated into PVsyst to model energy yield across all scenarios. While the tool is widely accepted by lenders, its reliance on hourly data posed challenges when working with climate projections, which are often available only in daily or monthly formats. Everoze developed a workflow to convert these datasets into PVsyst-compatible formats, enabling batch simulations over 50-year periods.

This initial work led to phase two. It was decided to expand the analysis to two new sites in Egypt and in Senegal to cover different climate conditions. It was also decided to undertake more granular analysis using daily resolution climate projections from 2015 to 2065, with hourly data available for Spain, a critical asset for evaluating solar power output potential under increasingly variable conditions. Each site was modelled using real-world PV system configurations.

Temperature effects

All three sites showed a consistent increase in mean annual temperature across all models and scenarios. As expected, higher temperatures led to a decline in performance ratio (PR) due to reduced module efficiency, but this decline was typically less than 1% over 50 years.

The evolution of solar resource was not constant across the three sites. In Spain, the different models predicted a small rise in global horizontal irradiance (GHI). This moderate brightening compensated the loss of efficiency due to temperature rise and the simulations predicted that the overall energy generation would remain stable over the upcoming 50 years.

Both Egypt and Senegal presented a negative trend in solar resource, increasing the reduction in expected energy yield already impacted by the reduction of module performance due to higher temperatures over the same period.

Compared to other long-term factors, such as module degradation and system downtime, the impact of climate change on energy yield is significantly smaller. To explore this further, we introduced first module aging and then randomly generated downtime events representative of PV asset failures to our analysis. These events had a much more substantial effect on performance ratio (PR) than projected temperature increases.

Industry implications

The study also highlighted practical challenges. On the data side, converting climate projection data into PVsyst-compatible formats is time-consuming and not commercially viable at scale, and running hundreds of simulations across multiple models and scenarios requires significant computing resources.

Industry inertia presents another roadblock. Lenders and developers remain hesitant to deviate from established practices, particularly when the perceived benefits are marginal.

To address these challenges, the C3S team is developing a parametric tool that integrates climate projections into PV yield assessments directly through the Copernicus web portal. This tool could eventually provide uncertainty factors that will streamline the process for developers and technical advisers.

Climate finance

While the direct impact of climate change on energy yield may be limited, other climate- related risks – such as extreme weather events – are not adequately captured in current models. The solar industry stands at a crossroads. By integrating climate projections into standard assessment tools like PVsyst, and by fostering collaboration between climatologists, developers, and financiers, the industry can build a more robust, future-proof foundation for solar investment.