Tailor-made and sustainable: That’s how support mechanisms should be

Retrospective measures, unexpected support scheme changes and other negative measures seriously damage the investment climate for solar photovoltaic technology in European countries Brussels, 10 December 2013 – The solar photovoltaic (PV) technology has grown over the past decade at a remarkable pace, becoming a major source of energy globally. However, the European PV sector has been continuously facing retrospective measures and other unplanned changes that directly attack the stability and viability of existing and future investments in a number of countries, as shown in an overview presented by the European Photovoltaic Industry Association (EPIA) at a Press Briefing today.

In recent years, different types of harmful measures have been introduced in several European countries. «Retrospective measures, moratoria, as well as unplanned reductions and cancellations of support are often intended to fix governments’ past mistakes of over-support, but they only deteriorate the situation: By generating an unstable environment for investments, such measures have provoked project cancellations, bankruptcies and job losses in the PV sector. What is more, they are putting governments’ credibility at risk, with negative implications for the whole economy», said Frauke Thies, EPIA Policy Director.

The situation is particularly troubling in some countries. In the Czech Republic for instance, numerous retrospective measures have been implemented in the past three years, leading companies to bankruptcy and making PV system owners unable to repay their bank loans. In Spain, the severe PV market contraction has shrunk the sector resulting in many job losses: Representing 60.000 direct and indirect jobs in 2008, the PV sector is now down to 5.000-7.000 jobs. Greece is another example of a country with great PV potential, but a suffering PV market due to inconsistent policymaking that undermines the trust and predictability needed for a favourable investment climate. Even if in certain countries national courts have already recognised some measures as illegal and unlawful, and have consequently revoked them, various retrospective measures are still being put in place or under discussion, adding further uncertainty on the way to PV development in Europe.

«In order to avoid any risk of over-compensation and to ensure a sustainable development of renewables in Europe, support mechanisms should undergo a «sustainability check»: They need to be technology specific, predictable and dynamic at the same time. This means that support levels have to be adapted on a regular basis, based on objective and transparent criteria», added Ms. Thies. «Such guiding principles should be kept in mind when designing support mechanisms for renewables, especially in view of the State Aid Guidelines the European Commission should release soon», she concluded.

EU imposes definitive measures on Chinese solar panels


The Council of the European Union has adopted the Regulations imposing definitive anti-dumping and anti-subsidy measures on imports of solar panels and cells from China yesterday. The European Commission itself has announced that it has adopted a Decision confirming the undertakings even though these undertakings should be adjusted now so that wafers are not covered by them and most likely to accept undertakings from around 20 additional Chinese exporters. The two Regulations and the Decision must now be published in the EU Official Journal by 5 December 2013 for entry into force by the deadline of 6 December 2013.

These duties and undertakings will be implemented for two years, starting on the day following publication.

Chinese exporters that participated in the undertaking are exempted from paying the anti-dumping and anti-subsidy duties.

EU producers or exporters and importers of Chinese panels and cells can request a review of the duties or undertakings but only after one year has lapsed since their entry into force. The European Commission at its own initiative or at the request of an EU Member State can launch such review at an earlier stage.

Please find here a link to the European Commission’s press release.

Germany’s ruling coalition sets new renewable energy targets


28.11.2013: In an effort to solidify their coalition, the Conservative Party (CDU) and the Social Democrats (SPD) have found a common line on Germany’s energy transition. According to several media articles citing people close to the matter, the ruling coalition has come up with a renewable energy target of 55% to 60 % of the country’s electricity mix by 2035. Prior to this solution, CDU was aiming for 50 to 55 % by 2030, whereas SPD was hoping for 75% by 2030. This target will influence how the coalition will make investment decisions regarding the development of new conventional and renewable energy power plants. © PHOTON

Why solar will be unstoppable despite a bumpy road ahead

If you look at the current state of the photovoltaic industry around the world, you may quite possibly be reminded of the French revolution that was famously described as “eating its children».

It does feel like large parts of the solar industry are experiencing a similar state of flux. The basis for the success of PV has been the relentless drive to reduce solar power costs to consumers of all kinds. At the same time, the resulting brutal price competition has claimed many victims and left the survivors struggling. Recently, it seems that several tier one Chinese manufacturers as well as downstream-oriented western PV companies such as SunPower or First Solar are seeing better times again, as prices have recovered slightly and demand proves to be very robust. Whilst most Chinese companies are far away from being able to pay back the huge debts they amassed during the last capacity expansion spree, many are starting to generate positive operative cash flows again.

The inconvenient truth for upstream players is that PV module and inverter prices and those for their components and materials are not poised to rise for an extended period of time any more. We will likely see short-term disruptions and volatility as we did in the past. However, as demand has become highly elastic with more and more PV markets only existing because of the new affordability of solar, rising prices will not last. The task for manufacturers, therefore, is to rebuild margin from the cost side up with little upside potential on prices.

This is good news for machine manufacturers. It increases the need for significant upgrade investments and innovation in the coming years.

Having enough production capacity at a now attractive price point still doesn’t make solar unstoppable. So what does?

At this point in its development, solar still needs support from policymakers to enable access and create a bridge to widespread economic application. Despite a number of complex niches already at grid-parity, such as diesel replacement, “end of line” and peak shaving, a broad application is just at the cusp of competitiveness, resulting in a very vulnerable position. At the same time, the perception that solar has passed the “point of no return” continues to grow. The once often heard notion that solar power will never be economically viable has all but disappeared. A sizeable technology sector and industrial investments drive this momentum further.

If you drill a little deeper, the reasons for going solar will differ around the world with the level of maturity in energy infrastructure. However, the trend towards a more decentralized energy supply does hold across continents and is the foundation for future renewable energy investments. I argue that in developed economies, the increasing number of people with positive experiences with PV systems is going to accelerate the «tipping point» for solar.

Let’s face it, electricity cost is a topic at the forefront of peoples’ and companies’ minds in the Western world. However, making electricity on your own as a cheaper alternative is still a non-topic for most potential private and commercial customers. If anything, we have reached new heights of outsourcing big parts of our private lives in recent decades, from ironing your shirts to doing grocery shopping. PV now needs the opposite to happen not only in a residential but also in a commercial context. But as solar technology gradually edges its way into every street and business park, a feeling like «there must be something to it if so many people are doing it» will creep in and should be magnified by companies in the field.

One of the biggest opportunities for PV companies exists in the commercial rooftop space. One might argue that the economics are better for residential customers as their electricity costs are higher in most western countries – however, a typical household will hardly ever reach a self-consumption level above 40% unless batteries are used, which are currently still economically challenging despite becoming more attractive every year.

In commercial rooftop applications though, a 100% self-consumption level is easier to reach, which changes the economics fundamentally. The key is to identify those businesses that also have power needs during the weekend. Cooling loads, air compression, process water heating and other energy needs can often be shifted to times with high solar output or even to Saturday or Sunday.

The current bottleneck is on the sales side. Who is able to find and convince these businesses that PV electricity is a topic they should care about? Here I would encourage PV companies to step up their game. Only a small fraction of commercial customers have even considered PV as a viable solution yet. The economic shift to PV competitiveness simply happened too fast for public opinion to catch up. It amazes me how many people still believe that the cost of solar power is two to three times higher than commercial electricity prices. This is no longer the case. Putting in the extra effort to actively address potential customers is the new frontier for creating sustainable solar demand.

Solar will survive «Energy Darwinism»

In a recent study named “Energy Darwinism – the evolution of the energy industry“, Citibank showed that the global energy mix is shifting more rapidly than expected. “Consumers face economically viable choices and alternatives in the coming years which were not foreseen five years ago”, the analysts conclude while noting, from the perspective of traditional utilities, an “alarming” fall in the cost of solar. In their view, conventional fuels and technologies are likely to be substituted, or suffer reduced demand in a best case scenario.

More cases in point can currently be observed in markets as diverse as Russia, Canada, the United States and the Middle East. In the first renewable energy auction in Russian history last month, PV won 80% of the volume with wind power adding the rest. At the same time, researchers of the Pembina Institute in Ontario released a report which concluded that PV is the cheaper and better energy solution than nuclear for the state (“Renewable is doable”, Sep 2013). Meanwhile, US utility Xcel Energy announced that in their competitive bidding processes for new power plant capacity, “solar PV made the cut for the first time”. They plan to build a series of multi MW-sized wind and solar plants in Colorado and other states.

But perhaps the biggest shift is currently happening in the Middle East. In recent years, almost all of the top 10 oil producing nations on the planet have pledged billions of dollars for investment into solar power. It has become apparent that burning oil is simply more expensive than using the abundant solar resource and selling the oil instead.

With this change of perspective on oil reserves from “cheap and abundant” to “precious and limited”, Saudi Arabia, the United Arab Emirates and others now tap their solar power potential with more determination than ever.

What is still standing in the way of solar?

Despite these recent and positive changes, the roadblocks are still considerable. First and foremost, our energy infrastructure in the developed world continues to be dominated by and structured for centralized power generators. Incumbent players, often still with deep pockets, have more to lose than to win at this stage. Not enough utilities are turning their superior customer access and grid knowledge into what is possibly the best solar value proposition around. That is understandable from the perspective of organizational culture and momentum, although sad to see. This will delay but not derail the rise of solar and other renewable power sources.

Secondly, public policy will stay erratic and incompatible with industry investment cycles in the coming years. Especially now, as “grid parity” is on the horizon, the political temptation to withdraw support just a year or two too early is considerable. We will continue to see shifting renewables schemes and surprising turns after every election, state by state. While the solar industry has become quite good at dealing with this, it still hinders solar growth.

The third challenge for the PV industry comes from within. The innovation dynamics are ruthless and a lack of reserves for bad times now comes back to bite many players. We have seen the bottom of aggregate industry profits (or losses) just recently. Nevertheless, we will likely experience some more casualties on the way out of the crisis. Looks like the revolution does indeed «eat some of its children». Those that come out alive however, will be stronger than ever with new market niches to address and a more stable business.

Whilst the road ahead for solar will not be entirely smooth, I firmly believe that solar has reached the «point of no return» and will be hard to stop from here on out. Momentum will continue to build for all stakeholders and manufacturers up and down the value chain in most parts of the world. If there has ever been a time to review your business and search for ways to better position your company in this decisive phase of growing opportunity, it is now.

Source: www.solarplaza.com – By Christian Langen

Germany Hits 59% Renewable Peak, Grid Does Not Explode

Wind and solar power peaked at 59.1 percent of German power generation earlier this month. It happened at noon on a very windy and sunny October 3, which is the German holiday commemorating reunification. (Germany also hit peaks of 61 percent, a record, and 59 percent earlier this year.)

Solar and wind provided 36.4 percent of total electricity generation over the entire day, with PV accounting for 11.2 percent.

The electrical grid appears intact but electricity prices took a tumble. According to an analysis by Bernard Chabot of BCCONSULT, low demand from large conventional power plants drove the electricity price index covering Germany, Austria, France and Switzerland to 2.75 cents per kilowatt-hour at 2:00 p.m.

Some additional stats from Chabot’s report about Germany’s power mix on October 3:

  • Solar and wind furnished a total of more than 436 gigawatt-hours.
  • At peak, solar furnished 20.5 gigawatts, with wind peaking at 16.6 gigawatts.
  • Conventional power plants had to ramp down to 23 gigawatts at about noon.
  • We recently reported on an NREL study specific to one U.S. regional grid (the Western Interconnection), which found the costs of backing up and integrating wind and solar are far smaller than the benefits accrued from the use of renewables. We’ve reported on the ways in which the traditional utility model is under threat from renewables. And we’ve heard from grid experts who see the European grid as strained and soon to be challenged by the onslaught of renewables.

    Source: www.greentechmedia.com – by: Eric Wesoff – October 28, 2013

    Bulgarian Energy Holding Seeks 30% Tax on Revenues of Photovoltaic Power Plants

    The Bulgarian Energy Holding (BEH) has asked the government and Parliament to agree to levy a 30% tax on revenues of photovoltaic power plants from electricity sold at preferential tariffs.

    According to a letter of Boyan Boev, executive director of the Bulgarian Energy Holding (BEH), as cited by mediapool.bg, the measure will achieve three goals, including to balance the system, which is currently plagued by a deficit which cannot be covered with the existing electricity prices, to capitalize the National Electric Company (NEK), which is currently in a state of technical bankruptcy with debts of over BGN 2 B, and to once again reduce electricity prices for household consumers, which were downsized by 4.5% in August.

    Boev’s letter was sent last week to Parliament Chair Mihail Mikov, to Ramadan Atalay, Chair of the parliamentary energy committee, to Economy and Energy Minister Dragomir Stoynev.

    This emerged from a letter sent last week by Boyan Boev, executive director of the Bulgarian Energy Holding (BEH) to Parliament Chair Mihail Mikov, to Ramadan Atalay, Chair of the parliamentary energy committee, to Economy and Energy Minister Dragomir Stoynev.

    In his letter, Boev proposes the adoption of changes to the Energy from Renewable Sources Act and he explains what burden renewable sources place on the energy system and electricity bills, not only in Bulgaria, but all over Europe.

    However, he proposes legal amendments which introduce a tax applicable to photovoltaic power plants only.

    In the letter, the chief executive of BEH points out that the energy system, which has been hit by the renewable energy boom, can be optimized through measures «such as changing the support mechanism and introducing tradable green certificates with a view to alleviating the burden on the budget and avoiding the regulatory risk, or the introduction of price restrictions – ceilings on purchase prices of renewable power.»

    The letter also proposes the introduction of an additional tax on the preferential prices for purchasing renewable electricity.

    «The tax rate is to be set at 30% and is to be levied on a monthly basis directly by the public supplier on the quantities of electricity sold by the producers,» he suggests.

    Source: www.novinite.com