PV SOLAR ENERGY IN THAILAND PHASE2: OPPORTUNITIES AND CHALLENGES

Transcription

1 PV SOLAR ENERGY IN THAILAND PHASE2: OPPORTUNITIES AND CHALLENGES Raymond Schonfeld 17 online.com Tel M [when in Thailand]

2 Introduction: issues addressed Global PV market: size, growth, segments Focus... focus focus: distractions to avoid The PV market in Thailand: size, growth, and the emerging rooftop market segment Marketing the trends to harness Finance emerging challenges Some proof that it s already being done Then 1) business models, 2) economics of solar Raymond Schonfeld 2

3 The market addressed tonight At the end of 2013, the EU (in blue on the bar chart) accounted for 59% of total cumulative installed capacity of PV in the world. GLOBAL CUMULATIVE INSTALLED CAPACITY OF PV Source: EPIA Global Market Outlook 2014 >40% Compound annual volume growth rate since 2000 Raymond Schonfeld 3

4 Focus on growth of an established market: an $80 $100 bn annual global market today solar pv installations will double hit grid parity by 2020/ Raymond Schonfeld 4

5 The 3 market segments in PV solar The rooftop market represents most of the commercial and residential segments COMMERCIAL: >10KWP <1 MWP: * Utility scale / solar farms: >1 MWP Residential: <10 KWP * Commercial is also sometimes defined as nonresidential, since some applications are non-business: e.g., hospitals, schools, government, agricultural farms Raymond Schonfeld 5

6 PV examples: 1) Solar farms 99% of solar installations in Thailand so far (by generating capacity)have been in this segment: utility scale solar farms Lop Buri 73 MW Solar Farm Lop Buri, 2.3MW Solar Farm Lop Buri 1.5 MW Solar Farm Raymond Schonfeld 6

7 PV examples: 2) rooftops Some installations, but negligible in total capacity so far. A primary focus of new efforts PTT HQ car park 0.33MW Tesco Lotus zero-carbon store: Bang Pra, Chonburi 0.33 MW Had Yai 3.2 KW Sky Park Hotel 6.7 KW Raymond Schonfeld 7

8 Projections for PV by segment non residential residential Source: IEA WEO 2014 edition Raymond Schonfeld 8

9 More to follow: 1) From today To tomorrow BMW Centre, Munich Raymond Schonfeld 9

10 More to follow: 2) A bit of technology that s transforming the way we live and think Neil McGregor, Director, British Museum Solar energy is at the heart of the new industrial revolution Nicholas Stern, Professor, LSE, and author of The Economics of Climate Change Raymond Schonfeld 10

11 At a glance: PV in Thailand Cumulative installed PV capacity: MW est.2014 Limited sectoral infrastructure 5 major owners / developers control c 80% of solar farms Perhaps c installation companies 3 tiny solar panel manufacturers Various suppliers of plumbing hardware ASEAN leader in market deployment >$4 bn invested by end 2014 Around 1% of global cumulative installed PV capacity Deployment to date almost wholly in solar farms Top end forecasts range up to 30bn of investment over the next 20 years. Raymond Schonfeld 11

12 Investing in solar: two essential criteria so far Financial return The world of project finance A dream ticket for solar energy? Falling costs, rising electricity prices, and rising green awareness Green awareness or CSR Siam Cement Group (SCG) 100 year building Source: World Bank Raymond Schonfeld 12

13 Cost reduction: sustained and sustainable 2014 LCOE (levelised cost of energy) for utility scale PV in Europe: / KWh (THB / KWh) Solar power will soon be the cheapest form of electricity in many regions of the world BUT There is a need for further research on the drivers of cost of capital in PV projects across the world and especially on the impact of policy making on cost of capital Cost drivers for small rooftop installations may differ more significantly from country to country Experience curve 19 23% Evolution of production costs for PV modules, which are the single largest element in a PV system Source: Current and future costs of Photovoltaics, Fraunhofer Institute, February 2015 Raymond Schonfeld 13

14 Behavioural economics starts to influence solar growth If your neighbour has rooftop solar, there is a much greater chance that you will have solar (or want to get solar). Rooftop systems tend to cluster in a neighbourhood, regardless if these neighbourhoods are wealthy or liberal. December 2014 Spatial Patterns of Solar Photovoltaic System Adoption: The Influence of Neighbours and the Built Environment. This research was spearheaded by Dr. Kenneth Gillingham, a professor of economics at Yale University. Dr. Gillingham is not an ivory tower solar newbie. He's been doing research in the solar industry for over a dozen years going back to his days at Stanford. up what influences people to install rooftopsolar?cmpid=wnl Wednesday December Raymond Schonfeld 14

15 Arguments for buying solar: summary Declining costs and rising prices lead to higher returns Green awareness / CSR Envy (cf. brand awareness) Doing something for Thailand: a sustainable national infrastructure of manufacturing, services, people, and finance Raymond Schonfeld 15

16 The challenge of finance: Mould breaking trends 1.Declining costs 2. Changes in nature and number of customers Project finance Raymond Schonfeld 16

17 The challenge of finance: early evidence of change [In the US market] Private equity and venture capital firms are pouring record investments into rooftop solar ($5 billion this year) for residential and commercial solar projects Questions from a few years ago How do I know the sun is going to shine enough to make the amount of power you say? or What if the solar panels don t work? nobody asks those anymore. They accept it s going to happen. Bloomberg, September 2014 Raymond Schonfeld 17

18 The challenge of finance: it should be easy but it isn t What s happening and why? Costs are plummeting. This has always been the theory behind PV: higher volume would bring costs down and make subsidy unnecessary. Customer numbers are moving from hundreds to hundreds of thousands. There are that many roofs. Where s the problem? For 20 years in PV, the finance sector has lived on subsidy and/or government guarantees. It s hard to change old habits. Existing business models of utilities cannot adapt to largescale integration of solar electricity generation. Major project finance players deal with mega projects, and most rooftop projects are small. Bundling is sometimes possible but not always. Raymond Schonfeld 18

19 Attachment to traditional mechanisms: comparison of EU support for PV solar _Energy_Retail_Markets_Comparability_Study.pdf Raymond Schonfeld 19

20 A larger toolbox to deal with finance Bundling / securitisation Leasing A selective, starting list only!! Combined storage / PV solutions Integrated clean energy/energy efficiency packages Indirect economic incentives that cost nobody anything Tax incentives that haven t been tried before Private PPAs and LOPPAs Virtual power plants (VPP) Links to LEED or other revenue boosting certification Net metering to transform payment models Working with utilities: paying them for backup capacity Crowdfunding Private equity outside project finance Tapping equity markets by establishing or exploiting critical financial mass; achievable through mergers... Raymond Schonfeld 20

21 The need to ride the new wave As solar becomes integrated with energy efficiency solutions, data analytics, and other technologies (such as storage), it will become an increasingly important element in the next generation of resource related services and of the world s coming resource revolution. In the not too distant future, a growing number of industries will have to take note of the promise, and sometimes the threat, of solar to business models based on traditional energy economics. Raymond Schonfeld 21

22 The work ahead Feature Larger customer base Examples >1 million systems in Germany, compared with only hundreds in Thailand today. Radically different marketing task Mix of customers of varying sizes (industrial / commercial / government), compared with single client utility market today Standards for products and services Training and skills Grid integration Integration with national policies for community energy programmes Finance and insurance New technical parameters and opportunities High volume of installations requires standard, reliable products and practices. No longer possible to rely on complex checks / audits of each individual installation. Uniform, high quality skills needed sustainably throughout the country. No longer possible to send short stay project teams from a single, central base. Uniform and practical framework needed for PPA, and possibly uniform solutions for off grid One Community One Renewable Energy policy is now open for ideas and programmes Simplified uniform criteria for financial evaluation for highvolume application, without compromising security of lenders Opportunities for uniform solutions in storage, smart grids, demand response management. Raymond Schonfeld 22

23 Steady penetration: the largest PV market In Germany, renewables are now the largest single category of fuel source in electricity production. Within renewables, the share of PV is increasing; wind is decreasing; bioenergy is stable. Source: Raymond Schonfeld 23

24 Steady penetration: 1 million rooftops in 6 years Population: 23 million, or around onethird of Thailand s population In 2013, the country installed its one millionth rooftop system, up from around 8,000 in 2007 By end 2013, cumulative PV capacity was 3.3 GW By late 2013, rooftop systems operated on 14% of Australia s residences Source: Renewables 2014 Global Status Report, by REN21 (Renewable Energy Policy Network) Raymond Schonfeld 24

25 THANK YOU FOR YOUR ATTENTION!! Raymond Schonfeld online.com Tel M (Europe) (only when in Thailand) Raymond Schonfeld 25