GENEVA, SWITZERLAND—(eSolarEnergyNews)—Etrion, a solar independent power producer, today announced that it has completed construction of the 70-megawatt (“MW”) Salvador project in the Atacama region of Chile. Project Salvador is the world’s largest solar power plant based on spot market electricity  revenues and is the second-largest solar park connected in Chile.

Marco A. Northland, Etrion’s Chief Executive Officer, commented: “The 70 MW Salvador solar park was connected five months ahead of schedule and under budget thanks to the hard work of our local team and contractors. This project almost doubles Etrion’s installed net capacity and is expected to significantly increase our annual cash flow. We look forward to advancing our 99 MW of greenfield solar development pipeline in Chile next year.”

Project Salvador is owned initially 70% by Etrion, 20% by Total and 10% by a local developer. Total’s affiliate, SunPower, was contracted for the engineering, procurement and construction of the solar park using SunPower OasisTM Power Block technology. Construction-related activities began in December 2013, and the solar park was connected to the grid on November 3, 2014. Project Salvador has entered into a long-term, fixed-price operation and maintenance agreement with SunPower. As part of this agreement, the project’s solar panels will be cleaned six times per year by SunPower’s new robotic system that expedites the cleaning process and achieves substantial conservation of water, thereby reducing cost and improving overall solar power production.

Project Salvador will initially operate on a merchant basis where the electricity produced will be sold on the spot market and delivered to the Sistema Interconectado Central (“SIC”) electricity network, with the ability to secure future power purchase agreements (“PPAs”). The solar power plant was built on 133 hectares leased from the Chilean government through a long-term concession, and the facility was connected through the power infrastructure of Corporación Nacional del Cobre de Chile (“Codelco”).

Project Salvador is expected to produce approximately 200 gigawatt-hours of solar electricity per year, enough to supply electricity to approximately 80,000 households in Chile.

Chile has an investment grade rating and offers attractive investment opportunities for leading financial institutions to provide non-recourse project finance. Project Salvador was financed by the Overseas Private Investment Corporation (“OPIC”), the U.S. government’s development finance institution, with a US dollar-denominated, non-recourse project loan for approximately 70% of the US$200 million total project cost. The remaining 30% equity portion was funded by Etrion, Total and a local developer based on their initial respective ownership interests.

SHANGHAI, CHINA —(eSolarEnergyNews)—Hanwha SolarOne, a top-10 global photovoltaic manufacturer of high-quality, cost-competitive solar modules, today announced it has signed a memorandum of understanding (“MOU”) with Yantai Municipal Bureau of Commerce (“YMBC”) to establish a long-term strategic partnership with the aim to develop distributed generation (DG) PV projects. Yantai is a major port city located in Shandong Province, China. YMBC will help secure rooftop space, facilitate project approval and grid connection, as well as aid with obtaining tax preferences and project financing. As part of the strategic partnership Hanwha SolarOne intends to develop, own and operate 100 MW of distributed generation projects in Yantai. The agreement is in place for five years with either party able to cancel with 90 day’s notification.

Mr. Jay Seo, Chief Financial Officer of Hanwha SolarOne and head of Hanwha SolarOne’s China business commented, “Hanwha SolarOne continues to make progress in establishing a downstream business in China. Through this partnership we have already identified rooftops that will accommodate approximately 8 MW of DG projects and are now in the process of securing permits. We intend to use our own modules and perform the necessary EPC work for all projects under this MOU.” Mr. Seo concluded, “The latest government initiatives are already having a meaningful impact on the acceleration of distributed generation projects in China and we feel we are ideally positioned to gain further traction in the market going forward.”

DAVIS, CA.—(eSolarEnergyNews)—Blue Oak Energy, a commercial and utility engineering firm has completed the construction of a 2.6MW solar power generation facility in Winters, California. This accomplishment signifies a progressive renewable stance by residents and local authorities. The solar farm, which will be locally owned and operated, is located 30 miles west of Sacramento.

The completion of the project represents an important step forward in Blue Oak Energy’s mission to make our sustainable energy future a priority by delivering real world solutions today. Tobin Booth, the founder and CEO of Blue Oak Energy states, “Blue Oak Energy is delighted to have delivered the solar design and construction on Putah Creek Solar Farm. The successful collaboration between Blue Oak Energy, Array Technologies and Solvida Energy Group have been critical in meeting the project’s goals. We are excited for the residents of Winters and Yolo County, one of the greenest areas of the United States. We regard this project as a significant milestone in the city and county’s commitments towards an environmentally clean future.”

Putah Creek Solar Farm, LLC contracted Blue Oak Energy to engineer and construct the nearly 13 acre solar farm. The 8,640 modules are connected to DuraTrack HZ, a widely deployed single-axis solar tracker. These trackers were manufactured and supplied by Array Technologies, Inc. (ATI), a leading manufacturer of solar tracking and racking systems. Ron Corio, ATI Founder and CEO, states, “We are thrilled to be working alongside Blue Oak Energy yet again. They are a trusted partner that does exceptional work on each and every solar installation they are involved in.”

The solar farm was permitted through Yolo County and was included in the county’s Climate Action Plan. This action plan includes the reduction of carbon emissions through such measures as renewable energy production. Stephen Smith, the Managing Partner of Solvida Energy Group, explained, “We are proud to have worked with Yolo County, Blue Oak Energy and PGE to deliver the largest privately owned solar farm in Yolo County, CA. This groundbreaking project is a shining example of how cooperation between governments, utilities and the private sector will be critical toward providing energy security and reducing carbon emissions in California and beyond.”

On September 29, the Illinois Power Agency released its draft 2015 Procurement Plan regarding renewable portfolio standard (RPS) compliance for the state’s two regulated utilities, ComEd and Ameren — and then, on the very same day, decided to release a second “Supplemental” Procurement Plan for solar PV. The two plans both share great intentions for the best of interventions — and could bring projects with the right entrepreneurial conditions to glory.

Both plans call for the Illinois Power Authority to procure solar renewable energy credits (SRECs), but that’s where the similarities end. They differ with regard to funding, project eligibility, contract lengths, system requirements, and other factors. Sound confusing? It’s OK. We’re here to clear up the confusion.

The First Illinois Plan: Of the Four Procurements, Only Three Matter 

The first, “regular” plan sets out the IPA’s 2015 plan for procuring power from renewables for those customers of the state’s two main utilities who have not “shopped” for electricity (most of Illinois’ residents actually have shopped for energy on their own, thanks to electricity market deregulation, and rely on their retail electricity suppliers for compliance). In addition, the IPA has set up a procedure for spending the hourly “alternative compliance payments” (ACPs) the agency has collected from retail suppliers. This is because unlike in many states, some amount of these ACPs are collected each year whether or not the suppliers are otherwise in compliance. It proposes to use ~$13 million of this funding to procure ~80,000 SRECs in one-year contracts.

A one-year procurement of 80,000 SRECs is significant to the REC markets, but as the IPA itself acknowledges, almost certainly too high a risk to support any real, new projects.  Not only does filling in a long row of question marks after the first year not do much to improve a solar project pro forma, the timing of the procurement means solar developers would need to fully develop any such projects and produce their REC requirements in the portion of 2015 remaining to them. Moreover, the IPA does not have to solicit bids from new projects; if enacted, the regular procurement plan will likely “siphon up” SRECs from existing projects in and around Illinois (and IPA may need to go far afield indeed to find the 60MW of installed, uncommitted capacity required to do so).

The Second Illinois Solar Plan: Strength Training Through Supplements 

The second “supplemental” plan, despite the name, is the real driving force of the procurement, and the one adequate to support real solar development in the Land of Lincoln. It represents the one-year version of what we hope will be a longer-term fix to the IL RPS distributed generation scheme (a “glitch” in the Illinois law’s wording means that the IPA cannot currently spend some $50 million of solar-dedicated funds it collects annually). The Supplemental Plan schedules three procurement events, each for an auction of five-year fixed price REC purchases.

In this supplemental plan, the IPA will enter into five-year SREC contracts for new projects, with “new” meaning any projects that go operational after the date of the procurement event.

Not all systems are created equal — IPA has been instructed by law to get at least 50 percent of all RECs from systems with less than 25 kW in nameplate capacity, but curiously, this is a “target” and NOT a binding minimum requirement. As such, IPA has proposed a different set of rules for the two categories of solar arrays: those under 25 kW, and those from 25 kW to 2 MW. Bids from systems larger than 2 MW won’t be considered. The “target” of 50 percent sub-25-kW will come into play if the pace of new small-scale installations is slower than expected; in this case it might be possible for a sub-25-kW bid to be selected over a system with more than 25 kW, even if an owner of the larger system submits a more competitive (i.e. cheaper) bid, to meet the fifty percent target.

Another difference lies in the detail that each category will have a different “benchmark” price – in effect, a price ceiling. This (secret) benchmark is ultimately up to the discretion of the “procurement administrator” and will based on factors such as “observed market prices adjusted for expected local costs to develop and operate systems, available incentives, market returns on capital, and term of contract.”   

José Maria Llopis is Senior Vice President Project Business at IBC Solar. SWE spoke with Llopis about the trends in the global PV market and the strategy of IBC Solar in view of international business development.

SWE: Mr. Llopis, how important is the international project business within IBC SOLAR AG now and what role will it have to play in the future?

José Maria Llopis: Along with our distribution business, the project business as the company’s second business unit is becoming increasingly more important. We are now also going through this period of change that we are experiencing on the international PV markets. For the first time since 2013, Europe is no longer the world’s largest PV market. It experienced a 40% decline in newly installed capacity in the previous year. At the same time this is happening, the global PV market is booming.

SWE: What consequences have you drawn from this?

Llopis: We recognised this development at an early stage and therefore already started developing foreign markets years ago. IBC SOLAR has traditionally always been a key player in German distribution business and in the German project market. However, we now consider there to be better opportunities for us in the international project market and we are significantly expanding this field. Our aim is to increase the percentage of revenues for the project business to 55% by 2017.

SWE: How important are the other European countries in this context?

Llopis: The German market as we used to know it no longer exists. The newly installed capacity will remain below 2 GW this year and will therefore not even reach the extremely narrow range for additional capacity set by the Federal Government. There is however still a project market in Germany and new business models for e.g. industrial self-consumption are being implemented here in the medium-term. Other European markets haven’t developed as expected either, such as Poland. There have also been reductions in feed-in tariffs. These reductions have in part even been made retroactively as is the case in Spain and now in Italy. As far as Europe is concerned, we are currently still interested in Great Britain as a new project market in Europe and we are also developing individual projects in countries where we have been active in the past. However, we consider there to be major opportunities for us in the project markets overseas, especially in Chile, Japan and India.

SWE: What other countries are you focusing on besides Chile, Japan and India?

Llopis: IBC SOLAR is a German medium-sized enterprise. We therefore have to look closely at where we can expand our business in the long-term using our resources. We have nominated our core markets. In addition to those you have mentioned, we are also focussing on Turkey, South Africa, Namibia, the Middle and Far East and Central America. Each project market is different and develops according to its own particular rules. It is especially important for us not to assume that these markets have just been waiting for us to come along.

SWE: What are the characteristics of these individual countries?

Llopis: Japan is a very attractive PV market for German companies – there is  alucrative feed-in tariff along with a support scheme that complies with the German Renewable Energy Act (EEG) and the population has an extremely positive attitude towards renewable energy. However, Japan is also a very closed market where it is generally difficult for foreign companies to get a foot in the door. The current boom in Japan will however develop into a normal business in the medium term.

SWE: What is the situation in other countries?

Llopis: Chile is a completely free electricity market with high energy prices. In conjunction with the high irradiation values, the conditions created for photovoltaic-produced electricity are ideal there. Chile is the strongest project market in Latin America and the first market to operate without feed-in tariffs. In India, we have already overcome a steep learning curve, especially as far as the business culture is concerned. It is particularly important to develop a relationship based on mutual trust with partners in this country which allows you to understand their mentality and also involves having a great deal of patience. India always makes its presence felt upon entering the PV market. We have discovered that the process of exchanging knowledge and expertise also plays an important role in this country, especially when it comes to the part of system construction.

SWE: What role will the relevant support scheme play?

Llopis: We have to carefully examine which services we can and want to offer in the relevant market and what our market entry strategy will look like. Ultimately, we want to avoid commencing operations in a particular country and then leaving again a year later. As far as the support scheme is concerned, we need to understand the relevant system first.

SWE: Which variations are there?

Llopis: It may involve a copy of the German EEG like in Japan, a tendering model like in India, a market without any subsidies like in Chile or a combination of subsidies, self-consumption and direct marketing. The following generally applies: A thorough market analysis, a coordinated business model, local partners and above all else patience and perseverance are what is required.

SWE: Under what circumstances do you present yourself as a project developer and when do you act as an EPC service provider?

Llopis: We always adapt our business model to the conditions of a particular country. The first step is often to take on the role of a «technology provider». This means offering a package of engineering, procurement and supervision. This is what we did in India. We initially built four systems as a sub-contractor for a local company. We set up our own subsidiary in India in 2012 and are currently in the middle of completing a 5.5 megawatt project for which we are operating as an EPC general contractor and supplying the customer with a turn-key system including a final TÜV inspection. Yet, we have decided against developing our own projects for the Indian market.

SWE: And how did you go about getting your foot in the door in Japan?

Llopis: It is impossible for a German company like us to enter the EPC or project development business in Japan without having a Japanese partner company. IBC SOLAR may have over 30 years experience, but when it comes to photovoltaics, it is not as if the Japanese have been waiting for us to come along. That’s why Japan is a traditional project market for us. We were fortunate to find the right project developer and to acquire some project rights.

SWE: Is it possible to make general observations about how market entry works?

Llopis: When it comes to market entry, we generally always operate according to the step-by-step principle. If we have reached the step of active market development, we have already established contacts, delegated employees and developed a business model. The decision then has to be made whether we want to increase our local presence with a subsidiary or a sales office. We have currently reached this point in Chile for example where we opened a sales office in mid-June.

SWE: Which challenges does the foreign business have to overcome in logistics?

Llopis: You generally need to have plenty of patience when it comes to entering a market, the necessary staff resources to make your presence felt in the long-term and the ability to understand the country’s business culture. Relationship management with partners and customers is absolutely essential. That’s why we need flexible employees who are willing to spend a few months at a time in the country concerned. This is currently the case in Japan, as it is impossible to develop the market there solely from Germany.

It goes without saying that having a sales office or a subsidiary in a particular country makes it easier to manage operations. A good example is India: Our subsidiary in Mumbai is responsible for all «on-shore» services. In other words, for the construction work being carried out in that particular place. Important: Our Indian customer receives a turn-key system from IBC SOLAR at the end of the process which has been inspected and approved by TÜV Rhineland and which comes with guarantees for the individual components and the entire PV system.

SWE: How do you aim to ensure that you are able to compete against international competitors in the long-term?

Llopis: We are making progress as far as quality in the premium segment is concerned, but it goes without saying that we need to operate at the price level of the relevant market. We are aware of our responsibility towards our customers with our commitment to quality and substantiate this with relevant guarantees and performance ratios for our systems and with high bankability for the lending banks. IBC SOLAR has stood for quality and trust for over 30 years. We are committed to being active in the markets in the long-term and establishing a solid customer base.

The interview was conducted by Martin Frey.

Information on José Mª Llopis, Senior Vice President Project Business at IBC SOLAR

José María Llopis has been responsible for the project business division at IBC SOLAR since the beginning of 2014 in his role as Senior Vice President. The project business also encompasses the departments for EPC services and for the development of the company’s own projects. The native Spaniard was previously the CEO of IBC SOLAR’s Spanish subsidiary in Paterna (near Valencia) which was operating in both the commercial trade and the large-scale plant business across the entire Iberian peninsula. As a qualified industrial engineer, José María Llopis worked for a number of different companies in the telecommunications and energy sector before joining IBC SOLAR.

The work builds on Sandia’s recent successes with metal-organic framework (MOF) materials by combining them with dye-sensitized solar cells (DSSC).

«A lot of people are working with DSSCs, but we think our expertise with MOFs gives us a tool that others don’t have,» said Sandia’s Erik Spoerke, a materials scientist with a long history of solar cell exploration at the labs.

Sandia’s project is funded through SunShot’s Next Generation Photovoltaic Technologies III program, which sponsors projects that apply promising basic materials science that has been proven at the materials properties level to demonstrate photovoltaic conversion improvements to address or exceed SunShot goals.

The SunShot Initiative is a collaborative national effort that aggressively drives innovation with the aim of making solar energy fully cost-competitive with traditional energy sources before the end of the decade. Through SunShot, the Energy Department supports efforts by private companies, universities and national laboratories to drive down the cost of solar electricity to 6 cents per kilowatt-hour.

DSSCs provide basis for future advancements in solar electricity production

Dye-sensitized solar cells, invented in the 1980s, use dyes designed to efficiently absorb light in the solar spectrum. The dye is mated with a semiconductor, typically titanium dioxide, that facilitates conversion of the energy in the optically excited dye into usable electrical current.

DSSCs are considered a significant advancement in photovoltaic technology since they separate the various processes of generating current from a solar cell. Michael Grätzel, a professor at the École Polytechnique Fédérale de Lausanne in Switzerland, was awarded the 2010 Millennium Technology Prize for inventing the first high-efficiency DSSC.

«If you don’t have everything in the DSSC dependent on everything else, it’s a lot easier to optimize your photovoltaic device in the most flexible and effective way,» explained Sandia senior scientist Mark Allendorf. DSSCs, for example, can capture more of the sun’s energy than silicon-based solar cells by using varied or multiple dyes and also can use different molecular systems, Allendorf said.

«It becomes almost modular in terms of the cell’s components, all of which contribute to making electricity out of sunlight more efficiently,» said Spoerke.

MOFs’ structure, versatility and porosity help overcome DSSC limitations

Though a source of optimism for the solar research community, DSSCs possess certain challenges that the Sandia research team thinks can be overcome by combining them with MOFs.

Allendorf said researchers hope to use the ordered structure and versatile chemistry of MOFs to help the dyes in DSSCs absorb more solar light, which he says is a fundamental limit on their efficiency.

«Our hypothesis is that we can put a thin layer of MOF on top of the titanium dioxide, thus enabling us to order the dye in exactly the way we want it,» Allendorf explained. That, he said, should avoid the efficiency-decreasing problem of dye aggregation, since the dye would then be locked into the MOF’s crystalline structure.

MOFs are highly-ordered materials that also offer high levels of porosity, said Allendorf, a MOF expert and 29-year veteran of Sandia. He calls the materials «Tinkertoys for chemists» because of the ease with which new structures can be envisioned and assembled.

Allendorf said the unique porosity of MOFs will allow researchers to add a second dye, placed into the pores of the MOF, that will cover additional parts of the solar spectrum that weren’t covered with the initial dye. Finally, he and Spoerke are convinced that MOFs can help improve the overall electron charge and flow of the solar cell, which currently faces instability issues.

«Essentially, we believe MOFs can help to more effectively organize the electronic and nano-structure of the molecules in the solar cell,» said Spoerke. «This can go a long way toward improving the efficiency and stability of these assembled devices.»

In addition to the Sandia team, the project includes researchers at the University of Colorado-Boulder, particularly Steve George, an expert in a thin film technology known as atomic layer deposition.

The technique, said Spoerke, is important in that it offers a pathway for highly controlled materials chemistry with potentially low-cost manufacturing of the DSSC/MOF process.

«With the combination of MOFs, dye-sensitized solar cells and atomic layer deposition, we think we can figure out how to control all of the key cell interfaces and material elements in a way that’s never been done before,» said Spoerke. «That’s what makes this project exciting.»

At the core of this reform agenda is a framework for China to make the necessary shift to a new development model that can foster sustainable drivers of growth. A future sustainable growth implies the utilization of locally available renewable energy sources as well as allowing China to power its economy in the years and decades ahead. In this context the “Global Carbon Project” undertaken by leading research institutes concluded in September 2014 that this year’s global CO₂ emissions will hit a new record high, mainly due to China’s growth. Accordingly, China’s carbon emissions are expected to rise by another 4.5% to 10.4 bln tonnes in 2014: more than the United States (5.3 bln tonnes) and European Union (3.4 bln tonnes) combined. Against this background, last year China consumed approx. 3.7 bln tonnes of coal, the main source of China’s carbon dioxide emissions, which is expected to rise further to 4.1 bln by 2015.

By the end of 2013, overall China was the number one country in terms of installed renewable energy power generation capacity in general (both including and excluding hydro), and the leader in installed hydro and wind power, geothermal heat and solar water heating in particular. In 2013, China added a solar water heating capacity of 44.7 GWth, accounting for approx. 80% of the global market. Next to Germany, China is home to the second-largest installed photovoltaics power generation capacities and third after the United States in terms of biopower. Last year, China’s accumulated installed renewable power generation capacity reached 378 GW and accounted for approx. 30% of total installed power generation capacity, allowing China to generate in excess of 20% of its electricity (1 trillion kWh), equivalent to approx. 10.6% (coal equivalent) of its final energy consumption. In terms of renewable energy investments, with approx. US$ 56.3 bln, China was not only the single largest investor globally, but invested more than Europe combined.

Recent wind energy developments in China

Prevailing grid bottlenecks, which remain one of the largest challenges for China to overcome in order to increase its uptake of wind energy, saw some alleviation over the course of 2013 and 2014. Nationwide the curtailment has been reduced 25% YoY, down to 11% for all newly installed capacity. This encouraging development was due to new infrastructure being built, halting project approvals for certain provinces and the decision of developers to move new installations from Northern China towards Central and Southern China where demand is higher, grid infrastructure more developed, and a more attractive FIT exists. This geographical shift also meant that developers would tap into low-wind and high-altitude areas and have more challenges in terms of gaining access to land. Average full load hours (a turbine’s average annual production divided by its rated power) increased to 2,046 hours in 2013 — 8% higher compared to 2012. Total wind generation increased 36% YoY, thus representing 3% of China’s total generation mix. Last year, China’s newly installed capacity increased from 14.5 GW in 2012 to 16.1 GW, thus accounting for 45% of all new installations globally. China retained its pole position as the world’s largest wind power market and the country had a cumulative installed capacity of close to 92 GW. According to the 12^th Five-Year Plan (2011-2015), China aims to have at least 100 GW of grid-connected wind capacity by the end of 2015. Earlier in 2014, the National Energy Administration (NEA) declared it envisaged a minimum of 18 GW of new capacity annually.

Recent Chinese developments in photovoltaics

During 2013 and up until September 2014, the central government approved a series of regulations underlining an increasing desire to further promote the deployment of photovoltaic applications across the country. As a result, in 2013, China experienced a massive boom in solar PV development, i.e. 13 GW (2012: 5.04 GW), which is equivalent to approximately one third of global photovoltaics installations. Notably, the government has enacted regulations designed to support distributed photovoltaics, in particular commercial and industrial rooftop systems. Additionally, along with the announcement of a revised FIT, effective since January 1st, 2014, the central government confirmed that the FIT will be granted for 20 years, thus significantly enhancing investment security.

China’s current regulatory landscape results in the usual year-end-rush, e.g. Q4/2013 witnessed the construction of approx. 6.4 GW of PV power plants, representing almost 50% of total 2013 installations. Against this background, according to non-verifiable sources, out of last year’s 13 GW of installations a significant share is already experiencing severe quality issues. A recently conducted site investigation led to these (non verified) findings below.  

Recent biomass development

During the last two years, several laws and regulations have been approved reflecting the government’s intention to promote the further development of the biomass sector. The general goal of the Chinese government is to support biomass energy development, the use of new technologies and the implementation of new demonstration projects. Moreover, there is the intention to improve the market mechanism in order to actively foster the growth of biomass enterprises. In late 2012 the State Council issued the “Bio-industry Development Plan”, and as a major sector, bio-energy is expected to promote the commercial development of bio-liquid fuel, bio-gas and biomass power generation. By 2015, the plan’s forecast consumption of bio-energy is to exceed 50 million tonnes of coal equivalent (tce), which shall thus reduce CO₂ emissions by approx. 95 million tons. As well, by the end of 2015, a total of 5 GW of biomass power generation capacity shall be installed. On May 28^th, 2013, the State Forestry Administration (SFA) issued the first “National Forestry Biomass Energy Development Plan for 2011 – 2020”, elaborating guidelines, basic principles, development goals and the layout for China’s forestry biomass energy development. The plan stipulates that by 2015, forest wood energy resources will reach 5.24 million hectares, and by 2020 it will reach 9.43 million hectares. By 2015, starch forestry will reach 1.02 million hectares, and by 2020 it will reach 3.13 million hectares. The main intention of the plan is to promote the development of forestry biomass to produce liquid and solid biofuel and power generation to replace part of the fossil energy, by cultivating all kinds of forest energy sources.

European company perspectives

European companies operating in China recommend increasing transparency and promoting a level playing field, locally and nationally, for both domestic and international companies in the renewable energy sector in China. In this context, over the last six years, European wind turbine manufacturers have experienced a reduction of their market share in China from more than 25% in 2008 to around 5% in 2013. As the industry is going through a consolidation process, and new rules and regulations are being implemented, maintaining transparency towards foreign-owned companies is considered essential.

Against the background that the National Energy Administration intends to support multiple GW of photovoltaic installations annually, in order to ensure a long-term sustainable operation of high-performing solar PV systems, the establishment of an independent, third-party inspection, acceptance, verification and monitoring scheme for installed photovoltaic systems is encouraged by European companies. This would help to ensure that only high-quality components are used during construction, that installed systems comply with relevant technical standards, and monitoring data could be used for supporting efforts in optimising plant designs.

Despite the Chinese government issuing a series of laws set to improve the internal market mechanism in the biomass sector, in order to have greater transparency, competition amongst different players and fairer market access, European companies, however, argue that much more needs to be done. Among others, amending the subsidy framework, enlarging the investment scale, setting up efficient supervision and monitoring mechanisms, and promoting the stable involvement of European companies within this sector are all areas where significant improvements are required.

Frank Haugwitz

The above article contains excerpts of the “Doing Business in China Position Paper 2014/2015”  published by the European Chamber of Commerce in China in early September 2014. In its nature it is an assessment of the present situation perceived by European companies and elaborates recommendations on how the respective business environment in China could be further improved.

The author is Director / Asia Europe Clean Energy (Solar) Advisory Co. Ltd. (AECEA)

contact: Frank.Haugwitz@aecea.com.de

table copyright by the author

Despite a Slowdown, CI Solar Remains Poised for Growth

While residential solar installers battle for market share and yieldcos gobble up utility scale projects, the commercial and industrial (CI) solar space has been relatively quiet. Broadly defined as behind-the-meter projects between 50 kW and 5 MW, the middle market remains untapped due to market fragmentation and complexity associated with relatively smaller deal sizes. In fact, the number of middle market solar projects interconnected in Q1, 2014 was down 12 percent from the same quarter in 2013, according to the Solar Market Insight Report. Additionally, Q1, 2014 marked the first quarter that residential solar MW installed exceeded those installed in the CI niche since 2002.

Despite the roadblocks facing those active in the CI space, its tremendous potential can be seen on vacant rooftops throughout the U.S. The next great leap in solar will occur when financiers and developers combine to unlock the CI solar market, creating massive value for the solar industry.

Why Is CI Solar So Challenging?

At present, the CI solar market is by far the most difficult market to crack. Most deals are one-off’s, host origination is difficult, and PPA negotiations are seemingly never-ending. Adding insult to injury, most solar investors will pass on a seemingly good deal because it is too small or doesn’t fit their “credit box.” Occasionally a deal may reach financial close, but a statistical analysis of projects indicates that more than 85 percent of CI deals never reach the finish line. It is no wonder that many developers find a niche in other sectors of the market.

Partnerships: The Key that Will Unlock CI Solar’s Potential

In the face of all of these challenges, the middle market still holds more promise for both developers and financiers than any other solar market in the U.S. Per Bloomberg New Energy Finance, the solar middle market comprises roughly 30 percent of U.S. installed capacity, and no one firm has installed more than 10 percent of that. The Q2 2014 U.S. Solar Market Insight Report remarks that the CI space as a percentage of the overall industry has declined significantly in the last few years. However, they “see some opportunity on the horizon as companies develop mechanisms to build out and finance small commercial portfolios.” This indicates a relatively nascent market, containing the potential for a firm with the right business plan to take advantage of market conditions.

The key to cashing in on the hidden value of this space now lies in solving the challenges it presents. Much of this can be accomplished through scale and creativity. Combine those two ingredients with a solar financing partnership and you have the beginnings of a recipe for cracking open the CI market. Through a partnership, financiers can provide certainty around which projects to pursue and which to leave behind. A mutually agreed form set of legal documents can also cut back on the complexity of the space, and significantly reduce transaction costs and legal costs spent negotiating these documents. Both financiers and developers can benefit from a well-constructed partnership as they drive volume, reduce costs, and finance deals.

At Sol Systems we have partnered with a number of our developers to help bring CI projects to completion. We assisted our development partners by helping them to execute payment in lieu of taxes (PILOTs) in Massachusetts, renegotiate unfinanceable PPAs, or underwrite credit that most financiers wouldn’t touch or take the time to understand . The initial time investment pays off as we pursue repeat deals with our partners, utilizing the same documentation and structures.

It’s time for the solar industry to collectively wake the sleeping giant that is the solar middle market. Some will try and conquer the market alone, but like most things in life, it’s better with friends. Find a good partner, strap on your boots, and take down the last untapped market in the U.S. solar industry. 

Lead image: Moon and clouds via Shutterstock