Solar energy and transition risks: What you need to know as a PE or Infrastructure fund manager
Author: Anaïs LORAND 
As temperatures rise and hot summers become the norm, solar energy is proving to be more than just a source of vitamin D. It’s a driving force in the global effort of accelerating decarbonization. Private equity and infrastructure funds and portfolio companies committed to sustainable investing have understood this.
The development of renewable energy infrastructure is accelerating rapidly, with solar projects attracting growing interest from private equity firms and infrastructure funds. According to the International Energy Agency (IEA), solar photovoltaic (PV) is projected to account for around 80% of global renewable capacity growth through 2030. This trend is particularly strong in strategically important markets like India, which became the world’s third-largest solar market in 2024 by more than doubling its annual installations. This growth will be fueled by utility-scale solar projects and the rising adoption of rooftop systems, all supported by favorable policy and regulatory environments.
Capacity additions from different solar energy technologies under the Net Zero 2050 scenario, as illustrated in Altitude
Why does adaptation matter for asset managers?
While capital continues to flow, the solar energy sector faces transition-related risks that investors need to account for.
One of the most pressing of these risks lies in the rising costs and constrained supply of critical raw materials essential to solar panel production. According to IEA, prices of solar-grade polysilicon quadrupled between 2020 and 2021. With rising global demand and ongoing geopolitical tensions, prices are unlikely to drop. Silver costs are climbing, as solar panels consume about 20% of global silver supply for electrical contacts. Similar trends are seen in copper and aluminum. Supply chains remain vulnerable, with China controlling 60% of rare-earth mining and 90% of refining.
Beyond transition-related risks, the sector is exposed to nature-related risks, which also raise reputational and liability concerns for investors. Solar energy farms (photovoltaic and solar thermal) use land, potentially disrupting habitats, threatening biodiversity and degrading soil structure.
Therefore, building resilience is crucial for investors to avoid undermining their contribution to sustainability and profitability.
Global mineral demand for solar PV under the Net Zero 2050 scenario, as illustrated in Altitude
How can asset managers adapt to those risks?
At Altitude, we combine science-based analysis with deep insights into transition and nature-related risks. Based on our findings, we have identified several adaptation measures to capitalize on emerging opportunities and mitigate risks to asset managers’ portfolios. For example:
- Investing in innovation and materials efficiency: portfolio companies have dedicated R&D funding lines to reduce their dependency on scarce resources.
- Diversifying the supply chain: reliance on single sources or regions for critical materials is reduced, especially by diversifying the highly concentrated manufacturing of polysilicon, ingots and wafers.
- Engaging into recycling: according to IEA, in a Net Zero Emissions scenario, nearly 70% of silver demand between 2040 and 2050 could be met through recycling, provided solar panels are properly collected at the end of their lifecycle.
- Advocating for policy support and incentives: encouraging governments to support local manufacturing, recycling programs and critical minerals projects, reduces exposure to global market shocks.
- Biodiversity impact assessments: are conducted to evaluate portfolio dependencies and pressures on biodiversity. The LEAP framework developed by the Taskforce on Nature-related Financial Disclosures (TNFD) can be leveraged for nature-related issues. The development of such approaches helps reduce environmental pressures and foster biodiversity preservation.
Adaptation: a strategic opportunity for asset managers?
For private equity and infrastructure investors in solar energy production, adapting to transition and nature-related risks is not just about compliance. It’s about safeguarding returns and capturing emerging market opportunities. Investors who proactively support sustainable practices and innovation position their portfolios to benefit from regulatory incentives, shifting consumer preferences and technological breakthroughs.
Crucially, adaptation also means protecting solar assets from the growing impacts of physical climate risks. As extreme weather events (such as hailstorms, floods, wildfires and heatwaves) become more frequent and severe, the ability of solar PV farms and other infrastructure to operate reliably may be compromised. In this context, decarbonizing the global economy is not only about reducing emissions, but also about avoiding a future where climate volatility renders clean energy systems themselves increasingly vulnerable and inefficient. In line with this approach, Altitude has developed a catalogue of adaptation measures to help our clients build more resilient infrastructure.
Yet adaptation presents a complex challenge for the financial sector. To gain a deeper understanding, refer to our White Paper “Avoiding the unmanageable by adapting to the inevitable”, crafted specifically for investors and corporates, offering key insights on effectively navigating the adaptation process.
Sources
ARKA (2025). The Impact Of Solar Energy On Wildlife And Biodiversity. Available at: https://arka360.com/ros/solar-energy-impact-wildlife-biodiversity-sustainability#:~:text=impacts on habitats.-,One of the main negative impacts of solar energy on,and displacement of animal populations
IEA (2022). Solar PV Global Supply Chains. Available at: https://www.iea.org/reports/solar-pv-global-supply-chains/executive-summary
Reuters (2025). HSBC raises silver price outlook on gold strength, geopolitical risks. Available at: https://www.reuters.com/business/hsbc-raises-silver-price-outlook-gold-strength-geopolitical-risks-2025-08-08/
S&P Global Commodity Insights (2025). The energy transition’s disrupted path forward. Available at: https://commodityinsights.spglobal.com/rs/325-KYL-599/images/The energy transition’s disrupted path forward_FINAL.pdf
The Economic Times (2025). Breaking China’s magnetic grip: Can US and Europe end rare Earth dependence amid new export controls? Available at: https://economictimes.indiatimes.com/news/international/us/breaking-chinas-magnetic-grip-can-us-and-europe-end-rare-earth-dependence-amid-new-export-controls/articleshow/123229385.cms?from=mdr
TNFD (2023). Guidance on the identification and assessment of nature-related issues: the LEAP approach. Available at: https://tnfd.global/publication/additional-guidance-on-assessment-of-nature-related-issues-the-leap-approach/
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