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.