Session: How to be competitive in a globalized market?

Transcription

1 Session: How to be competitive in a globalized market? What is the true benefit of the PV industry? An analysis of the value chain Jan Knaack Rio de Janeiro, 09. September

2 Guiding questions Where is the value added of PV to an economy? Where is the value added by the manufacturing segment? Where is the value added in the development & installation segment? What can be done to make the economy benefit from the PV industry? Equipment Materials System components Wholesale & Distritbution Project Development Construction O&M

3 Global competition in the PV industry 2013 : The PV market is growing fast world wide: 139 GW cum. capacity Equipment Materials System components Wholesale & Distritbution Project Development Construction O&M Demand was around 37 GW (EPIA 2014) Production capacity: 67.6 GW Crystalline Module & 4.9 GW Thin Film Production: 43 GW of cells & 47 GW of modules Result - Consolidation: 100 s of cell / module manufacturers went bankrupt, other created large deficits Inverter market: Situation slightly better situation but competition is high Brasil cum. capacity: 12.2 MW ANEEL 8/ Approx. 30 MW off-grid.

4 Global competition in the PV industry 2013: Where are the main PV production capacities and where is added value? Equipment Materials System components Wholesale & Distritbution Project Development Construction O&M Machinery / Equipment: Germany, Switzerland, Austria, Japan, USA, China Silicon Production: Germany, China, USA, South Korea, Japan, Norway Ingots, Wafer, Cells, Modules: China / Taiwan, USA, Japan, Malaysia, Europe, South Korea, Norway, India Inverters: Germany, USA, China, South Korea, Europe Research institutes: Germany, USA, Japan, China, Europe All companies suffering from oversupply and ruinous competition with many bancruptcies since 2009 Does Brazil really want to enter this club?

5 Perspectives in the global market scenarios of market development: In 2014 between 33 GW and 50 GW Module manufacturing capacity by late Business as Usual Policy Driven Highest Probability Source: EPIA 2014 / JRC 2013

6 Upstream value chain business opportunities in PV? What are the strategies? Equipment Materials System components Wholesale & Distritbution Project Development Construction O&M Strategies to be successful in the manufacturing sector? Focus on hardware with little technological know-how to manufacture, relatively simple products (e.g. mountings systems) Invest massively to build state-of-the-art gigawatt factories to compete with PV products, mainly from China / Taiwan Develop new technologies to maturity (Organic PV, high efficiency cells, CPV) Acquire current technologies to produce locally, protected by custom tariffs or technical barriers Little added value to entire system Costly, high technology risk Risk of high PV electricity costs Is any of these approaches viable for Brazilian companies?

7 If upstream value chain investment involves high risks, are there any opportunities downstream? Equipment Materials System components Wholesale & Distritbution Project Development Construction O&M Business opportunities if -know-how available -investment funds available - (inter-)national markets accessible Framework for vusiness cases in Brazil: - Net-metering (ANEEL-Resolution 482/2012) - Renewable energy and solar auctions Business opportunities if - Lucrative support scheme exists (e.g. FIT) or - Grid parity has been reached + - Business cases applicable (e.g. selfconsumption) + - Finance available - national market accessible Can these support schemes create a market for Solar PV?

8 PV costs decreased by 60% in 5 years, reaching grid parity in many countries is Brazil among those countries?

9 Source: eclareon Has grid parity for self consumption been reached in Brazil? What can be done to facilitate it? Provide: Access to affordable world market priced products (locally manufactured or imported) & reliable technology Lean administrative permitting and grid access procedures Affordable financing opportunities Installations capacities & lean installation procedures Grid Parity for Sao Paulo residential sector self consumption (3 kwp) Grid Parity for Salvador commercial sector self consumption (30 kwp) *LCOE: Levelized Costs of electricity

10 Example from Germany: Affordable PV systems prices by import / local production Germany traditionally had no tariffs on PV product imports [Brazil: modules (12 %) and inverters (14 %)] Since mid 2013 EU imposed Anti-Dumping tariffs with minimum prices (0.59 /wp) & maximum import capacities (7 GWp) for Chinese products 1 0,9 0,8 0,7 0,6 0,5 0,4 0,3 0,2 0, /kwp BSW-Solar PV-Price Index Systems up to 10 kwp (without VAT) /kwp Source: BSW-Solar, Photovoltaik Preismonitor, 2/ =3.02 $ BR

11 Examples from Europe: Effect of legal administrative costs on the overall project costs 1 1 PV project development: Legal-administrative Cost Share (over total project development costs in %) The share of legal-administrative costs over total project development costs show burden that project developers have to bear This burden is normally reflected in national PV system prices BSW-Solar

12 Advantages of legal administrative processes in Germany for small residential systems Financing available Construction permits simple to get Taxation of PV-incomes is simple & to be done with tax declaration System connection & operation smooth. Further info:

13 1 USD = 2.27 $BR = 0.75 / Difference in Hardware costs < 5 % Financing & soft costs become important factors in overall PV costs comparison of Germany, Australia, USA From : Lessons from Australia: Reducing Solar PV Costs Through Installation Labor Efficiency. Rocky Mountain Institute. June 2014.,

14 Which factors enable Germany realize PV-projects very cost effectively? Financing: PV is a technology well known among banks Low -financing costs (> 3 % interest rate/ year) Feed-In-Tariff between (> 500 kwp) & (> 10 kwp) / kwh serves as security More profitable business models (self consumption, direct sales, etc.) come up, but the banks still need the guaranteed off-take (FIT) as security Cost base (system price) approach in Germany vs. value based approach (electricity price) in the US 3 rd party ownership is not common (leasing & finance companies margins, etc.).. 1 = 3.02 $BR

15 From : Lessons from Australia: Reducing Solar PV Costs Through Installation Labor Efficiency. Rocky Mountain Institute. June 2014., Source: Wagner & Co Which factors enable Germany realize PV-projects very cost effectively? Low installation cost: Good basic education of engineers, electricians, installers Lean, standardized processes for installation. Easy customer acquisition: PV-Technology is well known among potential customers FIT & government loan programs made it easy to invest in PV as attractive investment Grid connection regulations are clear and easy and utilities have a lot of experience with connecting PV

16 There is more to come: Project: Unlocking PV market potential in Brazil: Enabling PV financed by GIZ with BSW-Solar BSW-Solar examined Brazilian business models and implementation barriers to overcome (Apr Jul 14) New support mechanisms prepare the ground, but investor information, processes and regulatory framework can be improved. The Project Enabling PV: aims at contributing to the sustainable deployment of solar PV in Brazil by exploring the new potential and describes legal and administrative framework for shaping a favorable business environment for installing solar PV systems in Brazil Link:

17 Conclusions: The true value of the PV industry Equipment Materials System components Wholesale & Distritbution Project Development Construction O&M Cheap, clean electricity The global PV market is growing, nevertheless production capacities are far bigger than the actual and near to mid-term market size For new entrants, new markets have to be created with the right framework, benefitting from the experience world wide to create efficient markets With the right framework, PV can become, what it is meant to be: A commodity to produce cheap, clean energy, which can be used for enhancing other business processes without negative external effects!

18 Thank you for your attention Jan Knaack (again available from the 22. September 2014)