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SFCE Dec 18
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SFCE to sell off 100% interest in PV subsidiary to Chongqing Future Investment
Dec 17, 2015 | PV Tech
By Conor Ryan
Shunfeng International Clean Energy (SFCE) has announced that it has signed off on a deal to sell 100% equity interest in a wholly-owned subsidiary that owns and maintains nine PV projects in China to Chongqing Future Investment for approximately US$185 million. -
Will China’s next five-year plan be the initial phase of its energy transition?
Dec 17, 2015 | PV Tech
By Frank Haugwitz
Earlier this year China’s National Energy Administration (NEA) announced a target of 17.8GW of solar PV power generation capacity to be installed by December 2015, which alone constitutes a 70% increase year on year if realised. In late September the same government entity officially released a second target of 5.3GW to be added to the... -
U.K. Reduces Solar Subsidies Less Than Expected
Dec 18, 2015 | BNA Daily Environment Report
By Alex Morales
The U.K. said it will cut solar subsidies by less than previously proposed after the industry shed thousands of jobs and appealed for less draconian measures to wean developers off government support. The government also raised proposed deployment caps to allow for more installations between now... -
Why the ITC extension is better than expected for US solar
Dec 17, 2015 | PV Tech
By John Parnell
PV Tech: The result is surely better than people expected? Shayle Kann: SEIA has been pretty consistent in making their ask, which has been for a full five-year extension with 'commence construction' included; they didn't quite get that but, they got pretty close. The commence construction rule is a big deal. It's a really big deal. It appears to... -
China's New PV FIT Rates May Spur H1 Development Rush — Analyst
Dec 18, 2015 | Recharge
By Brian Publicover
China’s solar feed-in tariff (FIT) rates for 2016 will likely trigger a development rush in the first half of the coming year, as the new incentives are lower than initially expected, according to Taiwanese research firm EnergyTrend. Some solar projects that developers connect to the grid before 30 June, 2016, may still qualify for the 2015 FIT rates. -
UK 2016: A Q1 boom, an "unviable" ground-mount sector and solar sans subsidies
Dec 18, 2015 | PV Magazine
By Becky Beetz
Although the FIT cuts to solar were not as drastic in the residential sector as had been originally proposed by the government – 64% instead of 87% – meaning it still presents a viable investment opportunity, consensus is clear that the ground-mount sector has taken a big hit, attracting criticism from companies and industry bodies alike.
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SFCE to sell off 100% interest in PV subsidiary to Chongqing Future Investment
Dec 17, 2015 | PV Tech
By Conor Ryan
Shunfeng International Clean Energy (SFCE) has announced that it has signed off on a deal to sell 100% equity interest in a wholly-owned subsidiary that owns and maintains nine PV projects in China to Chongqing Future Investment for approximately US$185 million.
As part of the deal, US$100.2 million will be payable to the SFCE within three days after the related subsidiaries are reorganized, while approximately US$77 million will be payable by 30 June 2016, and the remaining sum will be payable from within three years.
Eric Luo, SFCE's CEO, said: "We are delighted to finalize this agreement and build a partnership with Chongqing Future Investment Co. With the ongoing development and maturation of China's solar market, more and more companies and investors are entering the clean energy market.
“We are adapting to this trend and earlier this year we announced that we would transform our business to focus on delivering comprehensive solar solutions, including integrated EPC, development and operation and maintenance services, so that we could provide completed solar projects to investors as standardized fixed income products. This agreement with Chongqing Future Investment clearly demonstrates our progress towards this new business model."
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Will China’s next five-year plan be the initial phase of its energy transition?
Dec 17, 2015 | PV Tech
By Frank Haugwitz
Earlier this year China’s National Energy Administration (NEA) announced a target of 17.8GW of solar PV power generation capacity to be installed by December 2015, which alone constitutes a 70% increase year on year if realised. In late September the same government entity officially released a second target of 5.3GW to be added to the 17.8GW, however to be installed by June 2016. In other words, China is aiming at approximately 23GW in 2015, which is truly ambitious.
In Q4 2013 a planned feed-in tariff cut due in January 2014 triggered demand amounting to around 7.2GW. A similar cut is on the table for early 2016. As this is not official yet, it is too early to tell if this will drive demand in Q4 of this year as it did in 2013. But according to the monthly demand analysis elaborated by AECEA, to date, demand between January and November 2015 is more than sufficient to potentially allow a realisation of the 17.8GW target. Ambitious targets
In mid-October various government officials representing the NEA announced in public that China is considering a total installed solar PV capacity of 150GW by 2020 requiring a minimum of 20GW to be installed annually between 2016 through 2020. To date, this target makes China the most ambitious country in terms of promoting the local deployment of solar PV, and only India, which is aiming for 100GW by 2022, comes closest so far. However, even the various government officials indicated that this long-term target is not yet set in stone and depending on the actual situation the target could be revised in both ways, i.e. further increased or decreased. The 150GW target is to be seen in the context of the next five-year plan (2016-2020), which is anticipated to be released during the National People’s Congress in March 2016.
Overall, China’s ambitions are clearly to increase the share of renewables in its energy mix today and in the longer term. Drivers are manifold – energy security and independence, energy conservation, environmental protection and reduction of greenhouse gas emissions, among others. In the summer of 2014 China’s current president Xi Jinping called for an ‘energy revolution’ and a growing share of renewables is part of that grand strategy. To support that, government officials have indicated that China is considering a long-term target for solar PV of approximately 400-450GW by 2030.
Given China’s prevailing planning mentality the setting of ambitious targets is indispensable; however simply setting ambitious targets is certainly not sufficient and the reason why a number of ministries and affiliated government entities are working on a number of crucial issues related to the power sector.
The latter itself is subject to a fundamental reform, which was rather vaguely outlined in an official document released by China’s State Council in mid-March this year. In late November the NEA and the National Development and Reform Commission (NDRC) released in total six fairly detailed documents outlining the next steps concerning the intended power sector reform. The objective of the envisaged power sector reform is to increase competition among the utilities (generation as well transmission and distribution) eventually leading to lower tariffs.
China has had a Renewable Portfolio Standard (RPS) since September 2007, which has been under review since May 2012 and to date no clear timeline has been communicated on when the amended version could become effective. A revised version, so the author believes, will undoubtedly drive demand for all renewables. Against this background, in 2015 the Inner Mongolia Autonomous Region and the Province of Hubei released updated versions of their respective RPS policies.
Most likely because of the experience gained in seven locations across the country over the last two to three years, China announced in late September this year plans to introduce a national green emission trading scheme by 2017. Considered a market-based financial tool, once operational, such a national trading scheme will trigger demand for renewables as well. Barriers to PV deployment
In the context of the above, overall, China is certainly on track to embark on its national energy transformation and the coming five-year plan will be the initial phase or centrepiece of this strategy. However, a number of existing constraints are likely to have a negative impact and may slow down the envisaged transformation.
To start with, China’s economy itself is slowing down and the so-called “new normal”, i.e. an estimated annual GDP growth rate of around 6.5-7%, leads to a fairly low power consumption growth rate, which is expected to be even lower in 2015 compared to 3.8% in 2014; between January and October this year, power consumption grew by only 0.7%. At the same time estimates suggest that approximately up to 130GW of existing thermal power generation capacities are idle.
To make matters worse, coal-fired power plant capacities in Q1-3/2015 have increased 50% year on year, according to NEA. Furthermore, recent findings published by Greenpeace in the autumn this year suggest that provincial-level government authorities have approved 155 coal-fired power plants with a combined capacity of 123GW between January and September 2015 alone. Equally crucial is the fact that utilisation rates of existing coal-fired power plants have fallen nearly 8% this year, reaching a record low. The deployment of nuclear power plants is obviously equally high on the political agenda with 26 units operational, 25 under construction and a further 59 planned, but not yet approved.
In order to cope with the projected generated power in future the existing grid capacity is subject to a massive expansion. In addition to today’s seven long-distance transmission lines a further 15 are scheduled to become operational between 2016 and 2018. In light of the projected additional power generation capacities, it remains to be seen whether the current grid curtailment rate of 10% for solar PV between January and September 2015, according to NEA, can be effectively addressed in future. To illustrate this issue the Inner Mongolia Autonomous Region has set a curtailment target of 6% for solar PV and 15% for wind for the running year in April. Solar the new normal?
China’s economic situation has changed and the so-called “new normal” may make the setting of such ambitious targets as indicated above obsolete. Despite these challenging changes, it is anticipated that the Chinese government will even more prioritise the local deployment of renewable energies in the coming five years. However, as in other areas as well, the initial phase of a fundamental transition won’t be smooth and a number of obstacles have to be removed first. Regarding the promotion of solar PV in the coming five years, AECEA is of the opinion that in particular distributed generation – commercial and industrial rooftop systems – will play a far greater role than in the past and expects that more related policies will be rolled out soon.
Against this background, the State Grid Corporation of China (SGCCC) plans to invest up to RMB2 trillion into the construction of the distribution grid under its jurisdiction between 2015 and 2020. Additionally, once operational and fiscal constraints related to distributed PV power plants have been effectively addressed the future “new normal” of added power generation capacities in China will be solar!
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U.K. Reduces Solar Subsidies Less Than Expected
Dec 18, 2015 | BNA Daily Environment Report
By Alex Morales
The U.K. said it will cut solar subsidies by less than previously proposed after the industry shed thousands of jobs and appealed for less draconian measures to wean developers off government support.
The government also raised proposed deployment caps to allow for more installations between now and 2019, according to documents posted Dec. 17 on the Department of Energy and Climate Change's website. Even with the improved conditions, the department said thousands of jobs may be lost in the industry.
Ministers are trying to keep a lid on subsidies that it says risk becoming a burden on consumers.
Energy Secretary Amber Rudd says the time is coming when solar power can compete with traditional forms of generation without subsidy, after the technology boomed in Britain over the past five years. The Solar Trade Association (STA) said in a statement that the government had only “partially listened” to its concerns.
“Subsidies should be temporary, not part of a permanent business model,” Rudd said in a statement. “When the cost of technologies come down, so should the consumer-funded support.”
Premium electricity payments for the smallest installations of photovoltaic panels will be slashed by 65 percent, the Department of Energy and Climate Change said in a statement. That compares with its August proposals for an 87 percent cut. Rates for systems larger than 250 kilowatts were given a bigger cut than previously proposed, while all rates for smaller systems were given lesser reductions.
Subsidies Reined In
Rudd has reined in assistance to solar, onshore wind, biomass and energy efficiency since she was appointed in May. The Office of Budget Responsibility, which advises the government, estimates spending on renewable-energy assistance programs will exceed Treasury caps by about a fifth by 2021.
The Energy Department also proposed Dec. 17 caps on installations of 84 megawatts to 107 megawatts a quarter through March 2019. That allows more development than the 41 megawatts to 48 megawatts limit proposed in August.
Even with the improved conditions, DECC's own impact assessment said the changes may lead to as many as 18,700 job losses in the industry.
“It's not what we needed, but it's better than the original proposals, and we will continue to push for a better deal for what will inevitably be a more consolidated industry with fewer companies,” STA Chief Executive Officer Paul Barwell said in a statement.
The association had warned that the limits on installations risked creating a “stop-start market” that left companies uncertain about their future. The lobbying group estimates that 6,500 jobs have already been lost in the industry since the general election in May, when renewable-friendly Liberal Democrats didn't win enough parliamentary seats to remain part of a governing coalition with the Conservatives.
Plan Will Allow for 1.2 Gigawatts
The STA had proposed a set of milder tariff cuts that would allow 2.7 gigawatts of installations from 2016 through 2019, as opposed to the 600 megawatts under the government's original plan. The new plan would allow for 1.2 gigawatts. About 1.6 gigawatts were installed under the program over the three years through October.
The current rates end Jan. 15, when there will be a three-week pause for new applications before the revised rates set in.
Rudd also confirmed plans to close a second subsidy program, the Renewables Obligation for solar projects below 5 megawatts, on April 1, a year earlier than it had been due for closure. She removed a policy called grandfathering, which allows solar developers to get premium payments over the lifetime of the projects by accrediting them before they are operational, backdated to July 22, when the original proposal was made.
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Why the ITC extension is better than expected for US solar
Dec 17, 2015 | PV Tech
By John Parnell
PV Tech: The result is surely better than people expected?
Shayle Kann: SEIA has been pretty consistent in making their ask, which has been for a full five-year extension with 'commence construction' included; they didn't quite get that but, they got pretty close. The commence construction rule is a big deal. It's a really big deal. It appears to apply throughout not just in the final year. In other words, if you commence construction on a project in 2019 and complete in 2022, you will still get the 30% credit. The going wisdom was that if there was going to be an extension, it would be a negotiation that would result in something less than this, so yes, this is above and beyond those expectations.PV Tech: Will this catch some companies by surprise, particularly those that planned around ITC cuts?
SK: None of these companies will be regretting what they have done. First of all the ITC extension has been passed early enough that a lot of projects that were going to be rushed to be completed by 2016 can bleed over into 2017 and even those projects that did do things like bridge the gap with a short-term PPAs, the economics of those projects just look better. I don't think it caught companies off guard in any way that would negatively affect them.PV Tech: What is the anticipated impact on demand?
SK: It's a meaningful impact, it’s going to be a significant difference, in every sector but it will be particularly pronounced in the utility-scale sector, which was poised to see the greatest negative impact from ITC expiration. In distributed markets, the primary difference that this creates is it opens up a lot of states that have not historically been major distributed solar markets that will become economic with a 30% extension. [Since this interview GTM has said it expects a 54% increase in the US market through 2020.]PV Tech: Does it also open the door to new states that didn't create the right regulatory conditions previously to develop a solar market?
SK: It definitely makes markets far less reliant on state-level incentives, which has been one of the major drivers of determining whether a state has a solar market or not. So you can definitely envisage a number of states opening up without state-level incentives which may not have happened in a 10% ITC world.PV Tech: Which states might benefit in the utility market? Is Texas a big winner?
SK: Yes Texas but for utility-scale, I don't think that is the only interesting one. With a 30% ITC extension you have a lot of states for which solar is going to be the most economic option for utilities looking to procure any kind of new generation. You have places like the mountain states, which have some pretty aggressive Clean Power Plan targets; you could see a lot of demand in those states - Montana, Utah, the Dakotas. Some of the south-east states too where we have already seen meaningful procurement, you could see that picking up substantially now. What's interesting about the extension for utility-scale is what it does to this trend we had seen in the past 18 months, of significant procurement outside of mandates. Now that will just be extended. You can easily imagine that PPAs for utility-scale solar are going to start being regularly signed below four cents per kWh and below.PV Tech: How will the extension impact the supply of modules into the US?
SK: The ITC extension increases demand and there is not enough supply in the US today, nor is there likely to be in the near-term enough module supply in the US to fulfil the entirety of that demand, nor should there be necessarily. The US is already getting a lot of [the modules] that are installed in the US from other countries, not all from China, especially because Chinese manufacturers are increasingly opening fabs outside of China. This definitely goes a long way to alleviate the possibility of oversupply in 2017, which was a concern, and should just continue to make the US an attractive market to sell into. So if you are a foreign manufacturer you have some certainty that if you want to serve the US either by selling straight through China or by building manufacturing facilities in other countries to sell into the US, the market will be there for your product.PV Tech: What are the short-term impacts on SolarCity, given its recent strategy change?
SK: It's going to be interesting; when they announced their reduced guidance they included a caveat that if the ITC was extended thy might revise those expectations. They haven't provided guidance beyond 2016, it’s not like there is 2017 guidance to revise, but what they have been doing was changing their strategy to build it around the idea of becoming cashflow positive at the end of 2016, basically in preparation for a 10% ITC world. Now, if there is no 10% ITC world, they can either stick with this strategy outlined recently and continue to grow at a more moderate rate of 40% a year kind of pace, which is still pretty fast, it’s just slow for Solar City. Or they could go back to the original plan and say we don't need to be cashflow positive by the end of next year, and continue to grow at 70-80%. I think they'll do the former and accept the certainty that the ITC gives them for many more years and continue to grow at 40% or so for the foreseeable future and be cashflow positive as they do so.PV Tech: What about SunEdison's prospects? They have had some struggles of late.
SK: SunEdison is more of a global company than SolarCity is and they are less exposed to the ITC on a relative basis. SunEdison is still primarily a US business and will benefit just as much anybody from the ITC extension. SunEdison's woes are mainly from investors not being convinced of the story and the stock price going down but as I look at their share now they are up 22% today. SolarCity is up 27% at the moment. From SunEdison’s perspective it certainly helps to have anything that boosts their stock price right now, which this is clearly doing.PV Tech: There is an election coming up, how well protected is this legislation from the next administration?
SK: It has more to do with congress than the president so it is not bombproof, you can repeal tax credits that exist but is rare to do so. For the most part, tax credits, congress tend to just let them expire. The president him or herself cannot unilaterally do it, they would need congress to pass another bill. It's unlikely, but not impossible to see a repeal of this, regardless of the next administration. -
China's New PV FIT Rates May Spur H1 Development Rush — Analyst
Dec 18, 2015 | Recharge
By Brian Publicover
China’s solar feed-in tariff (FIT) rates for 2016 will likely trigger a development rush in the first half of the coming year, as the new incentives are lower than initially expected, according to Taiwanese research firm EnergyTrend.Some solar projects that developers connect to the grid before 30 June, 2016, may still qualify for the 2015 FIT rates.
“(The) FIT scheme will stimulate stronger demand domestically in the first half of 2016,” EnergyTrend analyst Patrick Lin said. “Companies that own PV projects approved in 2015 will rush to build and interconnect their portfolios so that they can be eligible for the 2015 rates.”
From 1 January, projects built in western provinces such as Ningxia, Qinghai and Xinjiang will qualify for a FIT rate of 0.80 yuan ($0.12)/kWh, from 0.90 yuan in 2015. The new FIT is roughly 0.05 yuan lower than the tentative rates announced by the government in October.
PV arrays installed in Beijing, Tianjin and specific parts of Qinghai, Xinjiang and Gansu will receive a FIT rate of 0.88 yuan/kWh, down from 0.95 yuan/kWh at present, or roughly 0.04 yuan lower than initially expected.
Projects built in other parts of the country will be eligible for a FIT rate of 0.98/kWh — roughly within initial expectations — from a current rate of 1 yuan/kWh.
The sharper-than-expected cuts will likely drive down the internal rate of return (IRR) for projects built in western China and the greater Beijing area by 1% to 2%, according to EnergyTrend.
“EPC service providers may find ways to reduce PV system costs to maintain current IRR rates,” said Lin, noting that they may start favouring cheaper solar panels and inverters as a result.
The NDRC is expected to further reduce its FIT rates for 2017.
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UK 2016: A Q1 boom, an "unviable" ground-mount sector and solar sans subsidies
Dec 18, 2015 | PV Magazine
By Becky Beetz
Although the FIT cuts to solar were not as drastic in the residential sector as had been originally proposed by the government – 64% instead of 87% – meaning it still presents a viable investment opportunity, consensus is clear that the ground-mount sector has taken a big hit, attracting criticism from companies and industry bodies alike. According to some, however, it is not all bad news.
The government has closed the Renewables Obligation to all solar PV projects from April 1, 2016. While the plan is to gradually replace it with the Contracts for Difference (CfD) auction system, no decision has been made and developers are uncertain of its future. Grandfathering has also been pulled for all projects that do not meet the July cutoff date. Consequently, with a FIT of just 0.87p/kWh, there is very limited support for projects over 1 MW.
Ash Sharma, senior director of solar & storage research at IHS Technology tells pv magazine, "… the cuts will make it difficult for the commercial roof sector to take off and obviously the ground-mount sector is already unviable post March 2016. It's hard to see solar playing a larger role in the UK's future energy mix based on these changes."
"... the fixed FIT offers little and developers are not counting on CfDs any time soon, so there will be much more focus on private wire projects and maximising the value of existing ones," Nico Tyabji, an associate at Bloomberg New Energy Finance additionally told pv magazine.
He went on to day that developers knew what was coming and have been working towards getting their pipelines built before the final ROC cutoff. As a result, he forecasts another "big boom" in Q1 2016, which could see more than the 2 GW installed this Q1. Then, "a smattering of grace period projects allowed to accredit for up to another year," are expected.
Better than expected
Finlay Coleville, head of market intelligence at Solar Media Ltd was less pessimistic. He told pv magazine the ground-mount actually appears to have fared much better than anticipated, since the changes to ROCs are "nowhere near as bad as thought," with the new proposals give existing projects that qualify an extra 12 months, albeit it at lower levels.
"The large-scale ground-mount sector appears to have favored much better however, albeit with a raft of legal caveats that will have the lawyers sweating over for the next few weeks. But potentially the scope for build-out to 31 March 2017 at manageable levels does appear an option, but still requiring planning applications submitted before 23 July 2015 and subject to some subtle changes for Scotland that are yet to be fully assessed," he said.
The U.K's biggest large-scale solar farm developer, Lightsource Renewable Energy also takes a more positive view of the changes. "Whilst the announcement may not be the Christmas present the industry was hoping for, the announcement is certainly more positive than the consultation proposals and we believe that a much consolidated industry may be salvaged. We are reviewing the Government response in detail in order to fully gauge the impact on our own future plans," said CEO, Nick Boyle. "It’s important to note that the solar tariffs in the UK have actually done exactly what they were designed to do in driving the industry towards grid parity," he added.
While no details were offered, Boyle said Lightsource said it will be building large-scale solar plants without subsidies in 2016. "Admittedly, these plants will not be connected to the National Grid, but we are able to build and hardwire the plants directly into large electricity users – comfortably beating the retail price that they are paying for electricity," he explained.
He added, "However, we’re not quite there yet across the whole solar sector. Domestic and ‘Commercial & Industrial’ rooftops are the furthest away from grid parity and it remains to be seen if this latest round of changes will afford enough support to allow them to catch up to large-scale ground mount solar."
Investment in small-scale
Investment in the residential market still appears worthwhile, according to industry. In its documentation, released yesterday, the government calculates a target rate of return of 4.8% on solar PV installs.
Sharma tells pv magazine, "The new rates proposed will offer relatively modest rates of returns for domestic installations, that will at least prevent this segment being killed off altogether." This ties in with STA’s comments that "The new tariff levels are challenging, but solar power will still remain a great investment for forward-thinking home owners who want to protect themselves from volatile energy prices and do their bit to reduce global carbon emissions."
Speaking to pv magazine at COP21 in Paris before the final changes were decided upon, Lior Handelsman, VP marketing & product strategy, and founder, SolarEdge, said that there is "concern" that once the incentive mechanism changes, a lot of people are going to think that solar doesn’t make financial sense anymore. "But it makes different sense," he said. "The numbers are different but it still makes sense."
Another effect, he said, will be that a lot of the companies that operate in the U.K. solar sector are going to pull out. "They will – have – cut down staff, scale back activity, scale back advertising, and it becomes a vicious cycle," said Handelsman. "We’ve seen this in a lot of markets where there were FIT cuts, and I’m afraid it is going to be the same in the U.K." The government has estimated that between 9,700 and 18,700 solar jobs could be lost as a result of the changes.
Solar still makes sense
According to Handelsman, the U.K. industry needs to let people know that solar is still a viable option. "Whatever campaign there was to fight the incentive cut, which seems decided, the industry should convince people that solar still makes sense," he said.
"The U.K. market needs a lot of education around how to present this value of solar to homeowners, because if installers are very used to selling solar in a certain way, these are the numbers etc., everything changes and not necessarily all of them will adapt faster to the new sales pitch."
He added that the industry needs to adopt a new model of selling solar to homeowners, and to help the whole market understand the approach. "This will help start the market again," he said.
He concluded, "Technology wise, we hear that increasing self-consumption will make a big difference now in the U.K. so there is storage and load control. These are two products that we are now bringing to the U.K. market. They make the system more expensive but if that’s going to flip the numbers then it’s definitely worth it."
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