Paula Mints SPV Market Research/Strategies Unlimited
December 31, 2012 | 0 Comments
Held in wintry Beijing from December 9 through December 11, Intersolar China offered attendees an opportunity to share ideas and discuss the outlook for the solar industry as it moves from a stressful and margin sagging 2012 into hopefully, the beginnings of recovery in 2013. Despite an ongoing gloomy mood throughout the solar industry, the conference was well-attended and the attendees upbeat. The anti-dumping investigations in India and the EU, along with the U.S. decision, were addressed, though sometimes indirectly, during the conference. Representatives from Suntech, Yingli, and Trina did not offer presentations at the conference.
Frank Haugwitz, Solar Promotion GmbH and Deutsche-China Consulting chaired the opening session. Optimism ruled at the opening session where grid-parity, progress and success were topics of discussion. In his opening remarks Markus Elasser, Solar Promotion GmbH, noted that though China was the global leader in solar thermal rooftop installations, solar (in general) did not yet play a significant role in terms of energy generation in the country. Regarding the EU anti-dumping investigation, Mr. Elasser noted that a level playing field must be achieved concerning competition.
Berthold Goeke, Ministry of the Environment, Germany, said that Germany’s goal is to be carbon neutral by 2015. Mr. Goeke said that Germany’s goals of achieving 35% from RE by 2020 and 80% by 2050 present a significant technological challenges while requiring structural changes. Currently, RE has a >25% share of energy production in the EU.
Commenting on the changes to Germany’s EEG, Mr. Goeke stated that these changes were based on the high annual increases in deployment along with lower installation costs. Reminding the group that when Germany has a 52-GWp installation base the FiT will end. Currently, Germany has 30-GWp installed. Based on the current annual rate of 7.5-GWp installed per year, the goal of 52-GWp could be achieved in a little over 2.5 years. Mr. Goeke noted that the German FiT will now be reduced monthly.
Dr. Reinhold Buttgereit, Secretary General, EPIA, said that EPIA was founded in 1985. Chinese companies make up 10% of the membership. Dr. Buttgereit said that with >69-GWp installed globally, PV is a success story, with the EU having the strongest share of installations. Dr. Buttgereit reminded the attendees that it is important to remember that someone pays for the FiT. He noted that the problem is that the PV industry needs to solve is how to educate people about the value of solar. Dr. Buttgereit said that at the current rate the domestic market for installations is growing, China will be the #1 market for solar by 2014.
Remarking on the solar industry in general, Dr. Buttgereit noted that incentive driven industries are inherently unstable. Currently there is too much capacity to manufacture PV technology along with a debt and financing crisis in the EU. The solar industry cannot ignore problems with the grid and cannot ignore the need for economically viable storage.
Regarding the global competition and trade conflict, Dr. Buttgereit said that a decision must be arrived at quickly before the industry becomes further polarized in its attitudes as the real winners are coal, gas, oil and nuclear.
Sunil Gupta, Global Head of Technology and Clean Tech Strategy, Standard Chartered Bank, Singapore offered his perspective on the current situation and outlook for solar. Mr. Gupta noted that currently module prices are below the cost of production. Factoring in the cost of marketing, sales, etc, no one in the industry is making money. Of all RE technologies, wind has the largest market share in China, offering the investor a return of 11.6% and with an installation rate of ~20-GW annually. Mr. Gupta noted that the ROI for solar in China is ~13.5%.
During a session about global markets, Dr. Christof Aha, BBLaw, spoke about how changes in the German FiT will affect the market for PV and about the use of PPAs in Europe. Dr. Aha noted that Germany is moving away from FiTs to a PPA-model of market stimulation. He noted that the price to purchase power at the European Energy Exchange (EEX) is five to six Euro cents. Dr. Aha also noted that with many nuclear plants in Germany up for decommissioning, the cost of electricity will increase. Coal will remain the least expensive energy choice in Germany. Dr. Aha noted that prices for electricity in Chile are quite high.
Dr. Aha described the concept of what he termed a hedged PPA where power is sold to an off-taker (a concept introduced in Germany in 2011). Under this paradigm the grid operator pays, on a monthly basis, the difference between a) the average price paid for RE at the EEX and b) the applicable FiT based on the EEX the previous month. In addition the government/grid operator pays the renewable power producer (RPP) a management fee of 0.65 Euro cents/kW in 2013, 0.45 Euro cents/kW in 2014 and 0.30 Euro cents/kW in 2015. According to Dr. Aha, the hedged PPA option is quite attractive for large portfolios. In 2012, ~1.4-GWp has been opted for this scheme. The hedged PPA is much more lucrative for wind installations, which make up ~90% of the systems taking this option.
Consumption quotas are another method of receiving compensation in Germany. Under this scheme, and for plants installed after April 2012 for systems 10-kWp to 10-MWp, the system owner receives the FiT for 90% with the remaining 10% reserved for self-consumption or resold to an off taker. For operators of smaller systems, the 10% self-consumption is viewed as another cut in the FiT in January 2014.
In Germany, straightforward PPAs do not require a license and have preferred access when connected to the grid.
Dr. Aha noted that PPA bankability depends on the quality of the off-taker and the quality of the PPA.
Dr. Stanislaw Pietruzko, Warsaw University of Technology, Polish Society for Photovoltaics, said that Poland has 35.5 million inhabitants and has a similar sun resource to Germany. Poland gets 90% of its energy from coal. Currently, the PV industry in Poland is standing still waiting for a new law. Poland has 17-GWp of applications for wind, most of which will not be installed. In 2012, 5-MWp of solar was installed, some for off-grid such as lighting. Green certificates are the market mechanism. Under the draft law, systems <100-kWp will receive the FiT, while systems >FiT must use green certificates. The FiT for building systems <10-kWp will be 32-Euro Cents/kWh. Dr. Pietruzko estimates that the law will be enacted mid-2013.
During a session on battery storage, Dr. Matthias Vetter, Fraunhofer ISE, offered a comparison of the assumed costs for Redox-Flow, Lead Acid and Lithium-Ion Batteries. Dr. Vetter said that the Lithium-Ion batteries are most suitable for decentralized grid connected PV systems or solar parks, Redox-Flow batteries are interesting for deployments calling for higher storage times, and Lead-Acid batteries continue to be appropriate for off-grid applications and village mini-grids.
Lead image: Solar Panels Against Blue Sky via Shutterstock
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