Author: PV-Tech

Residential flourishes and utility flounders in mixed 2018 for US PV

Tariff and policy uncertainty saw installations decline across US utility and non-residential PV last year even as the residential segment bounced back, according to the Solar Energy Industries Association (SEIA) and Wood Mackenzie.

The latest update from the trade body and the consultancy found a 7% year-on-year dip for US utility-scale PV installations in 2018.

The segment, the analysis found, produced the bulk (6.2GW) of PV-wide capacity additions (10.6GW) in the country last year but faltered under “disruption, delay and even cancellation” due to Section 201 tariffs.

Adopted last year, the US levies on module and cell imports prompted sponsors to postpone 2018 commercial launches to 2019, according to the SEIA and Wood Mackenzie. In the Carolinas, delays were compounded by a hold-up with interconnections under the PURPA programme.

For utility-scale PV, the flip side to the Section 201 tariffs was that module prices are falling faster than expected. This, the analysis pointed out, boosted competitiveness and helped drive the signing of 13.2GW of utility solar PPAs in 2018; the resulting, current contracted pipeline of 25.3GW marks an all-time record for US solar. 

PV in US power addition top two for sixth year running

According to the SEIA and Wood Mackenzie, the 10.6GW added across all PV subcategories in 2018 marks the sixth consecutive year where solar is amongst the US top two for power additions, together with natural gas.

Unlike utility solar, the residential segment reversed its decline throughout 2017 by recording in 2018 year-on-year installation growth of 7%. The steady pace of addition indicates the market is nearing its maturity point, the new analysis indicates.

According to the document, installations across California, Massachusetts and the other typical residential heavyweights are being fast overtaken by new-entrants including Texas and Florida.

Future residential growth can be fuelled by incentives and net metering – Nevada saw a 261% jump in 2018 after reinstating the policy – but could be hindered by high customer acquisition costs, the SEIA and Wood Mackenzie noted.

Their analysis found a slight decline – 8% – in non-residential installations of US PV in 2018. Massachusetts and California alone saw a joint 450MW dip last year, although the former (64% drop) bore the brunt to a greater extent than the latter (17%).

See here for more information on the US Solar Market Insight by the SEIA and Wood Mackenzie

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Researchers tout hybrid approach for corporate PPA risks

The renewables industry could start moving towards PPAs covering both solar PV and wind given their potential to help offset intermittency, according to the World Business Council for Sustainable Development (WBCSD).

“It is our expectation there are going to be deals like these. Whether to reduce risks or otherwise, we think companies will start contracting multi-technology PPAs,” Mariana Heinrich, climate and energy manager at WBCSD, told PV Tech on Friday.

Her words followed the publication by the Council – which regroups sustainability-minded corporates worldwide – of a report mapping out the benefits and challenges of the hybrid PPA approach.

The key perk, Henrich said, lies with intermittency management. “The generation profile of both technologies is likely different enough for one to compensate for the other, particularly on a yearly rather than daily basis,” she explained.

The WBCSD report shows a PV-wind hybrid PPA can help alleviate imbalance charges, set by grid operators for power providers producing more or less than the volumes they had forecast.

It can also, Heinrich noted, reduce the need for top-up purchases when solar and wind don’t deliver. “What we’ve found is, the power a facility has to buy on top of solar and wind is less in a combined PPA than taken separately,” she said. 

Hybrid’s not for everyone

However advantageous, the multi-technology PPA approach has reportedly not been taken on publicly by anyone worldwide so far. Heinrich acknowledged WBCSD has witnessed negotiations in markets such as the US but said she couldn’t elaborate on the firms or technologies involved.

The rise of more innovative PPA models comes at a time when these structures are increasingly relied upon by PV developers. Solar corporate PPAs are on the rise and helping the industry, particularly in Europe, achieve revenue certainty without the need for subsidies. However, finding bankable corporates and negotiating deals after that point remains costly and time-consuming.

As Heinrich stressed, PV-plus-wind PPAs might not necessarily work for all developers. “They must decide: is the potential risk reduction actually enough to outperform existing methods?” she said. As the report itself notes, existing tools – typically having one party take on risk for a fee – offer the advantage of being “relatively simple”.

Advocates of the hybrid approach, Heinrich added, should also carefully examine PPA clauses. Performance standards are easier to establish for single- than multiple-technology arrangements. Decisions on when solar and wind would each be available to schedule maintenance – or whether any of the two is more important – can be complex, she explained.

Legislative changes must too be considered, Heinrich noted. “If there’s a change in the law but it only applies to solar, do you renegotiate the whole PPA or only the solar-specific elements?” she said. “None of these are hugely difficult problems, just questions firms must think about.”

See here for the full version of the WBCSD report

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Top finance names warn of scale of global green infra challenge

Structural hurdles are stopping investors from bankrolling clean energy, transport and buildings at the scale needed to limit catastrophic global warming, financiers have warned at the annual Climate Bonds Initiative (CBI) conference.

“Land acquisition is one the major challenges we face when investing in renewables and others. The lack of data around social impacts means we have to rely on external expertise, adding to costs and slowing things down,” Ritu Kumar, director at UK development finance institution CDC, said at the London event.

“Infrastructure is quintessentially an intergenerational investment yet in politics, decisions are made based on short-term cycles,” added fellow panellist Amar Bhattacharya, a senior fellow at the Brookings Institute. Tim Meaney from the Asian Development Bank struck a similar note as he warned countries their current “ad-hoc, unsystematic” approach with infrastructure means potential opportunities are being lost. 

Spotlight on solar skills

The remarks come at a time when players worldwide – development investors, country associations, funds under the UN umbrella – work to ramp up allocations to solar PV across emerging markets.

For CDC – a US$5.3 billion-strong investor in the world’s most challenging regions – business integrity and corruption are a key concern with infrastructure plays, Kumar explained. “We’ve had to turn down investments based on the fact we’re not comfortable with [these aspects],” she added.

According to Kumar, getting governance right was a key driver behind CDC’s decision to set up its own renewables arm Ayana, which is building some 500MW in solar in India with capital from Lightsource BP and others. Ayana, she added, has also empowered CDC to better offset the social impacts of solar projects.

“As we invest, we’ll be providing training for unemployed youth living near our assets, with a goal for half the trainees to be women. If you’re cutting down on fossil fuels and there are redundancies, you need to grow the right skills – it plays into the ‘just transition’ concept,” she explained.

The green bond opportunity

The annual CBI conference took place at London’s Methodist Central Hall, which – as CBI CEO Sean Kidney noted in his scene-setting keynote address – was the venue for the first meeting of the UN General Assembly in 1946.

“I’ve always avoided war analogies but now it’s the time. We’re entering a period of extreme global stress, a world of weather volatility and refugees,” he told a financier crowd spanning the likes of HSBC, Credit Suisse and Moody’s Investor Services.

“We’ve done remarkably well with capital accumulation in the past but it’s deployed in the wrong place. Make no mistake: this is a choice we can make. We have the capital and the window to act, but it’s a short window,” he added.

Kidney’s solution – which he termed as a “vast green infrastructure boom” – would have investors ramp up allocations to clean energy, transport and buildings. Data supplied by the CBI to PV Tech shows the climate bonds it promotes are becoming a route for solar investments worldwide, with millions raised by PV projects in China, India, Australia, Thailand, Mexico and others.

An EU taxonomy to guide investors

Also working to channel more finance to solar are EU policymakers, who are currently designing a taxonomy setting out the criteria – emission cuts, do-no-harm requirements with pollution and biodiversity – PV and many other industries must meet to be considered a sustainable investment.

Olivier Guersent, the European Commission’s director general for financial services and internal market, was quizzed by PV Tech over the taxonomy at the fringes of the CBI event. “With renewables, the lack of projects can be an issue. It’s difficult for investors to consider projects in a cost-efficient manner – that’s why we’re trying to standardise,” he said.

This publication’s own conversations show grid constraints are a deterrent for investors, with some new fearing connections won’t keep up with the capacity under planning. Guersent pointed at the need to invest in energy storage. “Look at Spain. If you can use extra energy to pump up water by night, and create more energy, you can create synergies,” he remarked.

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Enel Green Power North America starts construction on largest PV project in Texas

Enel Green Power North America has started construction on the 497MW Roadrunner solar plant in Upton County, Texas. Once completed, the installation is set to be the largest solar facility in Enel’s US portfolio and the largest solar project in the state of Texas.

Georgios Papadimitriou, head of Enel Green Power North America, said: “This plant is the latest major milestone for Enel’s operations in the US renewable market, where we have already started construction of projects for almost 1 GW this year. The US market is rich with opportunities for growth and has an increasing appetite for sustainable electricity. Projects like Roadrunner are indicative of our ability to capitalise on this trend, while boosting the diversity of the business both in geography and technology.”

The Roadrunner project is expected to enter into operation in two phases. The first phase, comprised of 252MW, is expected to be complete by the end of 2019, while the remaining 245MW of capacity is expected to be operational by the end of 2020.

Once both phases are completed, the solar plant will be able to generate approximately 1.2 TWh annually, while avoiding the emission of over 800,000 million tons of CO2 per year.

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UK fund to raise US$250 million for US solar investment

A new listed-fund in the UK will float next month with the intention of raising finance for US solar projects.

New Energy Solar Manager, a developer and asset owner with more than 800MW in operation, will manage the US Solar Fund (USF) with a target 5.5% dividend for investors. Over the lifespan of the solar plants, a net return of 7.5% is expected.

John Martin, CEO of NESM, said: “As the leading global solar market, the US represents a rapidly growing infrastructure investment opportunity. Driven by its increasingly competitive cost, solar is expected to become the predominant source of new electricity generation in the US. We have identified a high-quality, well-diversified pipeline of assets and we expect to deploy the funds quickly and deliver excellent risk-adjusted returns for investors,” he added.

Listed funds in the UK have become among the major owners of UK solar assets. USF will be listed on the London Stock Exchange.

“USF represents a unique opportunity for UK investors to access the highly attractive US solar opportunity,” said Gill Nott, chair of the board of USF. “Investors in USF will benefit from the extensive, diversified pipeline of construction-ready solar assets which has been developed by NESM over the years and the values of the pipeline solar assets are expected to re-rate as they become operational. With an anticipated target return of over 7.5%, USF offers investors long-term, stable, risk-adjusted returns along with positive social impact.”

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US solar feeling ‘invincible’ after navigating treacherous year

There’s nearly always a positive vibe at a trade show. A combination of the organisers’ best efforts and the virtuous circle of talking to like-minded people all day, which is great for your brain chemistry, leaves you feeling lighter than you may on an average day in the trenches. It doesn’t necessarily mean what’s happening beyond the showfloor warrants the smiles and backslapping taking place on it.

With that caveat at the forefront of my own mind, I have to say that Solar Power International 2018 felt extremely positive. I’m a dour, sceptical Scotsman. Provoking enthusiastic positivity for anything can be a slog.

Context could be king in this instance. The industry has dealt with steel tariffs, the Section 201 trade barriers, the drop in demand for tax credits and, just before the show began, 25% tariffs on Chinese inverters. Having ridden out all that and having conversations about new solar States opening up to deployment, module prices falling and trackers carrying on their march to higher latitudes, is fairly remarkable. New projects, new technologies and new opportunities.

“In general, there’s a really positive feeling of invincibility to the market,” says Steve Daniel, VP of sales and marketing at mounting and tracker manufacturer Solar FlexRack. “Back in March, I didn’t think we were going to feel this way in September. It’s been very difficult with the tariffs, we’ve just had to work through them but we haven’t seen much drop off because of module or steel tariffs.”

That’s not to say that there hasn’t been some pain but as Daniel describes it, this is being shared.

“Everyone has lowered their margins a little bit and their expectations, but the projects are still moving. There’s been a few delays, but there are always delays in solar projects. Anything can happen and I’ve seen everything. It doesn’t feel that different. It’s just another set of issues to work through,” he adds.

What’s next in the US calendar? Solar & Storage Finance USA returns to New York for its 5th time later this month and will be looking at raising capital for solar, storage and collocated solar and storage projects in the USA. The conference aims to help delegates understand how debt providers are evolving propositions for storage and how they can access projects for standalone and co-located projects. Meet debt providers, funders, utilities, corporate off takers and blue chip energy firms with capital to invest.

There is lots of talk about some of the lumpiest boom and bust markets (think Europe) heading towards a period of growth that is more sustainable. The testing year that the US has just ridden out is another example.

“I think there is a resiliency in the industry that people have built up. I’ve been doing this for eleven years now and every year there is something new and we just figure out a way to keep going,” says Daniel adding that the end demand for solar is contributing factor now the “economics are fantastic” and “undeniable”.

Joe Song, VP of project operations at the developer and investor Sol Systems is reluctant to make a prediction for the coming year. He sees one outside factor contributing to some of the positivity.

“The only that has ever been true is that whatever we expect to happen, will definitely not happen! We went into 2017 thinking all these projects were going to progress and then 201 came around and it paralysed the industry. Everyone went into this year thinking no projects were going to happen. Come May the China market pivoted and it opened up a whole lot of opportunities.”

In addition to the scope for using high-efficiency modules, off the back of those price reductions sparked by China’s policy shift, trackers, emerging US markets and an increasingly hard line on soft costs offer plenty of reason to cheer. Even for a dour Scotsman.

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The 2018 Virginia Energy Plan calls for 3GW of solar and wind installations by 2022

The Commonwealth of Virginia’s new energy plan has called for 3GW of solar and wind installations by 2022 as well as grid modernization to handle both solar and wind totalling 5GW by 2028.

Virginia’s Governor, Ralph Northam released the State’s ‘2018 Virginia Energy Plan’, which provides policy over the next 10 years that is intended to promote renewable energy, energy efficiency and grid modernization for renewables and the transition to electric vehicles. 

Virginia’s utility companies are expected to collectively invest US$115 million per-year in energy efficiency programs, alone.

The plan also calls for 3GW of solar and onshore wind to be deployed by 2022, and 2GW of offshore wind to be deployed by 2028.

“The clean energy sector has the power to create new business opportunities, expand customer access to renewable energy, and spark the high-demand jobs of the 21st century,” said Governor Northam. “Virginia can shift to a more modern electric grid that is reliable, affordable, resilient, and environmentally responsible—and the Commonwealth can lead this critical industry as a result. This plan sets an ambitious path forward for Virginia, and I am confident we will charge ahead towards progress over the course of my administration.”

According to the US Solar Energy Industries Association (SEIA), the 2018 Virginia Energy Plan was an important step for the state to expand solar energy installations over the next 10 years. 

“Governor Northam deserves credit for his leadership on clean energy and for establishing goals that are aligned with business and the public’s desire for energy that is affordable, creates jobs, protects the environment and grows Virginia’s economy,” noted Sean Gallagher, vice president of state affairs for the SEIA. “The solar industry will work with policy leaders, manufacturers and installers across Virginia to meet these benchmarks.”

The SEIA also noted that Virginia was currently ranked 17th in the US for its 635MW of installed solar capacity and supported more than 3,500 jobs and nearly 200 companies across the state.

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CIP starts building 300MW of solar projects in Utah and Texas

Renewable energy fund manager Copenhagen Infrastructure Partners (CIP) has started construction on two solar projects totalling 300MW(AC) in the US.

The projects are being built on behalf of the Copenhagen Infrastructure III (CI III) fund and they are the first projects of the company’s roughly 1.1GW(AC) US solar portfolio to reach this stage.

The Misae project of 240MW(AC) capacity located near the city of Childress, Texas, will use JinkoSolar’s monocrystalline solar panels, while M.A. Mortenson Company will be responsible for EPC and O&M.

The project has also entered into a power price hedge with a financial institution, which is one of the first of such hedges to be signed for a solar project, CIP claimed. The project is also expected to secure third-party tax equity funding. CIP bought the Misae project earlier this year.

Commercial operation of the project is expected in Q4 2019.

The Sage project of 58MW(AC) capacity is located in Rich County, Utah. RES America Construction (RES) will perform EPC services while First Solar will provide modules as well as ongoing O&M services. CIP bought the project in April 2017.

The project has a long-term power purchase agreement with PacifiCorp subsidiary, Rocky Mountain Power. The project also expects to secure third-party tax equity funding. It is expected to become operational in August 2019.

“The solar projects will provide long-term, stable and predictable cash flows with an attractive risk/return profile for the CI III investors and complement the existing portfolio of investments in onshore and offshore wind and other renewables technologies,” said Christian Skakkebæk, senior partner at CIP.

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RES awarded Texas solar-plus-storage project by utility CPS

Known historically for its oil and in the present day for deploying large amounts of wind energy and latterly for deploying batteries at wind farms, the US state of Texas is less well known for solar-plus-storage projects.

UK-headquartered multinational developer and EPC (engineering, procurement and construction) provider RES Group has just announced however that it has been contracted by Texas utility CPS Energy to execute a 5MW(AC) solar project co-located with 10MW / 10MWh of lithium-ion battery energy storage.

The combined system will be capable of capturing peak solar production around the middle of the day, to be stored and injected into the grid in the late afternoon and evenings when consumer demand has its own peak and solar production has tailed off for the day.

Visit Energy-Storage.news to read the full version of this story

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Cypress Creek gets US$200 million equity investment from Singapore firm

US solar developer Cypress Creek Renewables has received a US$200 million investment from the Singapore-based firm Temasek.

The funds have been used to purchase preferred stock and warrants for a 10% common stock stake. Two independent directors will be added to the Cypress board. Last month Temasek, which is owned by the Singapore government, led an investment round that provided Cypress with a US$450 million credit facility.

In a statement, the company said the latest equity investment would be used to extend and deliver upon its portfolio of projects.

“Temasek has shown itself to be a patient, forward-looking partner focused on generating sustainable long-term returns – and it is this shared vision that makes expansion of our relationship quite natural,” said Matt McGovern, CEO, Cypress. “The confidence Temasek has shown in our business model and development portfolio is a firm endorsement of our strategy, which we look forward to refining and executing on in tandem in the years to come.”

In May, Cypress said it would be delaying around 1.5GW of projects as it reassessed the market following President Trump’s Section 201 trade tariffs on cell and module imports.

“Our strategy focuses on creating markets, originating projects and allocating capital to the most attractive risk-adjusted opportunities, with success being driven by our ability to navigate development, structural and financial complexities as well as assessing and pricing risk,” added Brad Bauer, Cypress’ chief capital markets officer.

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