Rapid falls in solar and energy storage costs and rising renewable penetration have prompted a surge in PV plus storage projects.

In 2019, the number of US solar plus storage projects, either announced or online, rose from 16 to 38, the Lawrence Berkeley National Laboratory (Berkeley Lab) said in a recent report. The projects are spread across 11 states and 10 are online with the remainder scheduled to start up by 2023. PV capacity varies from 10 MW on SunPower’s Redstone Arsenal project in Alabama, to 690 MW on Quinbrook and Arevia’s giant Gemini project in Nevada.

In a highly competitive power market, developers are using installation learnings to deploy larger solar fields and batteries to drive down project costs.

Last August, asset management group Capital Dynamics acquired the 180 MW solar/90 MW storage Townsite project in Nevada from Skylar Resources. With a volume capacity of 360 MWh, the battery will provide four hours of storage.

The Townsite project forms part of a commitment by Capital Dynamics, Tenaska Power Services and data center developer Switch to build 1 GW of low-cost solar power in Nevada.

The Townsite project is the first U.S. solar plus storage project to secure fixed volume power purchase agreements (PPAs), Capital Dynamics said. The company has secured PPAs with two local government municipalities and a cooperative. Tenaska Power Services will provide energy management services, including sale and purchase of surplus or deficit merchant power and battery scheduling.

“Our view is that this type of service represents the future of the renewable energy sector,” Allehaut said.

Solar plus storage will become “increasingly the standardized design” for PV projects, he said.

PPA pioneer

Solar developers are expanding their storage expertise to gain a competitive advantage.

Some developers “have made it standard practice to always provide a storage option when responding to a solicitation,” Berkeley Lab said in its report.

Of the 36 solar plus storage projects outlined by the lab, 26 have four hours of storage capacity and the remainder have between two and five hours of capacity. Four hours capacity allows operators to dispatch power across higher price evening peak demand periods, as solar intensity falls.

                Top 10 US states for solar penetration in 2018

Source: U.S. Energy Information Administration's Electric Power Monthly, February 2019.

Developers are using a wide range of different revenue structures for storage dispatch.

Several early projects bundled the storage costs into a time-invariant power purchase price with further stipulations in the PPA about how the storage must be dispatched, Berkeley Lab said. More recently, PPAs at the large Arrow Canyon, Southern Bighorn, and Gemini projects in Nevada bundled the cost into a PPA price that spikes to 6.5 times its normal level between 4 p.m. and 9 p.m. during the summer, when demand is high, it said. Other structures include nodal pricing plus a premium, a fixed capacity payment, or recently in Hawaii, a lump sum payment for being available for dispatch.

The first-of-a-kind fixed-volume PPA commitment for Townsite introduces new operational risks, highlighting a growing confidence in battery performance.

The fixed-volume arrangement allows the developer to aggregate multiple customers and use storage to reshape the production profile to closely match the fixed volume, Allehaut said.

"We then sell excess supply and buy any block where our combined solar and storage is insufficient to deliver the fixed volume,“ he said.

Under the current PPAs, daytime load hits a maximum of 115 MW between 7 a.m. and 10 p.m. during the summer, falling to a minimum of 65 MW during this time period in April, figures from Capital Dynamics show. Night-time load remains between 25 MW and 45 MW throughout the year. This leaves significant potential for merchant power sales. The battery is expected to dispatch around 100 GWh per year and the plant will lie within the regulated NV Energy network, which borders markets such as California's CAISO. 

     Capacity limits in western Energy Imbalance Market (EIM)

                                                  (July-September 2019)

Source: CAISO

Storage dispatch strategies can significantly impact operations and maintenance (O&M) costs, affecting degradation rates and narrowing potential maintenance windows. Batteries must be replaced or upgraded several times within the lifetime of the solar plant.

To mitigate O&M risks for Townsite, the developer will use proven tier 1 suppliers and sign long-term service contracts, Allehaut said.

“We are favoring local content and proven technology. We will sign a 20-year service agreement alongside the battery supply,” he said.

Storage costs

Capital dynamics has not published the price of the Townsite PPAs. However, the PV to battery capacity ratio for the project is 50% and this ratio can significantly impact the cost of the facility, Berkeley Lab said in its report.

For a four hour battery, a PV-battery capacity ratio of 50% increases the overall PPA price by around $10/MWh compared with a stand-alone PV project, Berkeley Lab said. A 25% ratio incurs a smaller uplift of around $4/MWh while a 75% ratio might raise the cost by $15/MWh, it said. These averages were based on a limited sample of relatively small utility-scale projects, but on a levelized basis were largely in line with projections used by developer NextEra, the lab noted.

In its latest investor presentation in August 2019, NextEra highlighted the ongoing reductions in battery pack costs.

Based on a four-hour battery at 25% PV-battery ratio, NextEra pegged the PPA storage price adder for a project online in 2022 at $4-$9/MWh, down from $8-$14/MWh for a project commissioned in 2020.

By Neil Ford 

US solar jobs multiply as installations soar

US solar employment is forecast to rise by 7.8% this year to 269,500 jobs due to a surge in new installations, the Solar Foundation said in its latest National Solar Jobs Census.

Around 18 GW of solar power is expected online in 2020, including 12.6 GW of utility-scale PV, according to the latest quarterly market report by Wood Mackenzie Power and Renewables and the Solar Energy Industries Association (SEIA). The U.S. Energy Information Administration predicts 13.5 GW of utility-scale solar capacity this year.

                    US PV installation forecast

                                  (Click image to enlarge)

Source: Wood Mackenzie Power and Renewables, September 2019

Employment in solar installation, the largest job sector, is expected to grow by 9.5% this year, adding around 15,000 jobs to the US economy, the Solar Foundation said. Employment in operations and maintenance (O&M) is expected to rise by 4%, equivalent to 463 new jobs nationwide, it said.

In 2019, Solar employment rose by a modest 2.3% to 250,000 workers as Section 201 import tariffs curbed demand for new projects. Over the last year, falling costs and growing project efficiency have refueled bullish sentiment.

Job growth was fastest in Georgia, where employment rose 29.8% to 4,798 jobs. Florida was top on total jobs added, creating 1,843 new positions in 2019 for a total 12,202 workers.

                   Top 10 US states for solar jobs growth in 2019

Source: National Solar Jobs Census 2019 (Solar Foundation).

Oil group Galp to build 10 GW of renewables by 2030

Portuguese oil and gas group Galp plans to build around 10 GW of new renewable energy capacity by 2030 in a major diversification into low carbon technologies, the company announced February 18.

Galp plans to spend 1.0 billion-1.2 billion euros ($1.3-1.6 billion) per year in 2020-2022, of which 10 to 15% will be on renewable energy projects, the company said at its annual capital markets day. Galp will focus most of its renewable energy investments in Spain and Portugal, but will also seek opportunities in other markets, it said.

Last month, Galp agreed to buy stakes in 2.9 GW of Spanish PV capacity, in operation or under development, from ACS Group.

Valued at 2.2 billion euros, the portfolio includes 900 MW of operational capacity and 2 GW of projects scheduled to be built by 2023. The deal is expected to be closed in the second quarter of 2020, at which time Galp will make a payment of 450 million euros and assume 430 million euros of project finance liabilities for operational plants.

Including other solar assets under development, Galp will have 3.3 GW of installed solar capacity by 2023, making it one of the largest solar operators in Spain. Equity returns from this portfolio are expected to be above 10%, it said.

Falling solar technology costs and growing offtaker demand have reignited Spain's solar market. Spain was the largest solar market in Europe last year and is forecast to install 3.5-4 GW/year of new capacity in the next five years, according to industry group SolarPower Europe.

Galp plans to allocate 40% of new investment in businesses that help to reduce carbon emissions. The group plans to finance new solar plants through project finance and will look for partnership opportunities.

As consumers and businesses shift away from fossil fuel resources, oil groups are accelerating "zero carbon" objectives and investing in renewables. Earlier this month, London-based oil and gas group BP said it aims to reach "net zero" by 2050.

Iberdrola installs jump five-fold as investments soar

Iberdrola accelerated renewables construction and installed 5.5 GW of new global power capacity in 2019, five times its annual average over the last few years, the Spanish utility said in its annual results presentation February 26.

Iberdrola's net profit rose by 13% in 2019 to 3.4 billion euros as heavy investment in renewables and networks took effect. Iberdrola increased investments by 32% in 2019 to 8.2 billion euros, with 41% spent on renewables and 44% on networks.

The company will increase investments to more than 10 billion euros in 2020, some 40% higher than the average for the last three years, installing 4 GW of new capacity.

Iberdrola is building an additional 9 GW of new capacity globally, scheduled to be commissioned in 2021 and 2022, and has a development pipeline of 40 GW. Spain is a key growth market for the group, along with Portugal, the UK, US, Mexico and Brazil and Australia.

"We have around 100 projects under construction around the world at the moment," Iberdrola CEO Ignacio Galan told Reuters.

Iberdrola's EBITDA (operating profit) rose 8.1% in 2019 to exceed 10 billion euros for the first time. Positive impact from networks, retail and rising generation capacity outweighed the negative impact of lower hydroelectric power generation.

Iberdrola raised its net profit outlook to "high single-digit" average growth for the period 2020-2022, boosted by strengthening climate policies in Europe and the US.

New Energy Update 

Iberdrola's giant 500 MW Nunez de Balboa solar plant in south-west Spain highlights the scale and speed of solar construction taking place in the country.

Built within a year, the 290 million-euro ($315.5 million) project is Europe's largest solar facility. Located in Usagre in the western region of Extremadura, the project site spans an area of some 2,470 acres (1,000 hectares) and includes 1.43 million solar panels, 115 inverters and two substations.

Construction group Eiffage Energia was the lead EPC for the project. Supply contracts were signed with 30 companies, many of them local, for a total value of 227 million euros.

After years of activity, Spain's PV sector is thriving as developers race to meet auction deadlines and falling costs spur unsubsidized projects.

Spain connected a record 6.5 GW of renewable energy to the grid in 2019, up from just 330 MW a year earlier, according to figures from national grid operator Red Electrica. The country is forecast to install 3.5 to 4 GW/year of new capacity in the next five years, according to SolarPower Europe.

The Nunez de Balboa plant is due online this quarter and Iberdrola plans to install more than 2 GW of PV capacity across six projects in Extremadura over the next two years and a further 1 GW in Spain's other regions.

The explosion of activity in Extremadura will severely test construction and logistics capabilities in the region. At peak construction, Nunez de Balboa involved some 1,200 workers, many of them local.

Iberdrola will use a common construction strategy across all the projects, using different subcontractors, suppliers and management teams to build in parallel, a company spokesperson told New Energy Update.

"It is planned that at least six projects will be built simultaneously," the spokesperson said.

Big gains

As demand for renewable energy grows, solar developers are stacking multiple offtake contracts to build large projects that benefit from economies of scale. As a power utility, Iberdrola also benefits from a large retail customer base.

The 500 MW facility is expected to produce 832 GWh of power per year and Iberdrola has signed long-term power purchase agreements (PPAs) with Kutxabank, telecoms group Euskaltel and supermarket group Uvesco. The remainder of the power will be sold to retail customers or the wholesale market.

Spurred by falling costs, non-utility developers are also building larger projects to gain scaling benefits.

UK-based developer Solarcentury is currently building the 300 MW Talayuela Solar Project in Extremadura and the 200 MW plant near Seville in Andalusia, both without subsidies. Spanish construction group Prodiel will build both plants.

“There’s a sweet spot at which the sites are large enough to realize economies of scale on construction but not so large that you need to negotiate with an unmanageable number of landowners,” Tom Heggarty, global solar power analyst at Wood Mackenzie, said.

                     Growth forecast for Europe's top solar markets

                                                         (Click image to enlarge)

Source: SolarPower EUrope, May 2019.

After recently completing Nunez de Balboa, Iberdrola plans to start construction of its 150 MW Campo Aranuelo complex in Extremadura in "early 2020." The company's other PV projects in Extremadura include Francisco Pizarro (590 MW) in Torrecillas de la Tiesa, Ceclavin (328 MW) in Alcantara; Arenales (150 MW) in Caceres and Majada Alata and San Antonio (50 MW each) in Cedillo.

Labor is a key driver of costs and large projects allow operators to maximize labor efficiency, often rotating specialized teams to install and maintain large numbers of similar components.

Iberdrola expects economies of scale from replicating engineering design across similar plants in Extremadura, such as the layout of fixed structures and trackers, the company spokesperson said. The technology and plant size depend on factors such as site conditions and grid capacity.

The simultaneous construction of so many projects is a significant logistics challenge for Iberdrola and its construction partners.

To mitigate risks, Iberdrola is working with partners in advance of construction to optimize the shipment of components from factory site, the spokesperson said.

Large projects also provide significant economies of scale during the operations and maintenance (O&M) phase which can be further increased through new technologies.

DNV GL subsidiary GreenPowerMonitor will provide SCADA-based plant monitoring solutions to Nunez de Balboa.

Advanced sensors and monitoring technologies allow operators to use data analytics to implement predictive maintenance strategies, reducing plant downtime and labor costs.

Other solutions include automated systems and remotely operated technology such as drones, which offers greater benefits across larger plants.

Iberdrola's focus on the Extremadura region will also allow specialized regional maintenance teams to move from one project to the next, increasing labor efficiency and minimizing costs. Centralized spare parts networks also reduce spare parts risks, particularly when combined with data analytics.

Outside risks

The sharp growth in solar installations in Spain raises project risks associated with grid connections and permitting procedures.

Red Electrica has committed to invest 110 million euros in the Extremadura grid to support 10 GW of new renewable energy capacity in the region by 2030. The grid operator will submit a wider national grid development plan to government later this year.

A smooth permitting process in Extremadura has also helped to support the fast plant build, Iberdrola said. This will need to continue for developers to meet project deadlines.

There are currently 154 PV projects under development for a total capacity of over 8.2 GW, according to the regional government.

“This is good news for renewable energy for the Extremadura economy," Olga Garcia, Extremadura minister for Ecological Transition and Sustainability, told New Energy Update.

"The numbers show that what was expected has already become the reality,” Garcia said.

By Paul Day
 

US solar industry calls for resilience as coronavirus hits activity

The global coronavirus pandemic is significantly impacting U.S. solar plant development and will curb the record installation levels expected this year, the U.S. Solar Energy Industry Association (SEIA) said March 17.

“We know anecdotally that the COVID-19 pandemic is affecting delivery schedules and our ability to meet project completion deadlines based partly on new labor shortages," SEIA said in a statement.

"This once again is testing our industry’s resilience, but we believe, over the long run, we are well positioned to outcompete incumbent generators...and to continue growing our market share,” it said.

The latest forecasts before the crisis predicted annual PV installations would soar by 47% in 2020 to almost 20 GW, SEIA and Wood Mackenzie said in a joint report.

This represents an upward revision of around 2 GW from previous forecasts made by the groups in September. Growth would mainly be driven by the utility-scale market and total annual installations were expected to creep above 20 GW in 2021, SEIA said.

US solar installation forecast before coronavirus pandemic

                                         (Click image to enlarge)

Source: SEIA, Wood Mackenzie

Before the coronavirus crisis, US solar employment was forecast to rise by 7.8% this year to 269,500 jobs due to the surge in new installations, the Solar Foundation said in its National Solar Jobs Census.

Employment in solar installation, the largest job sector, was expected to grow by 9.5%, adding around 15,000 jobs to the US economy, the Solar Foundation said. Employment in operations and maintenance (O&M) was expected to rise by 4%, equivalent to 463 new jobs nationwide, it said.

New York unveils 17 new utility-scale solar projects

Developers NextEra, SunEast Development and Boralex all won multiple solar projects in New York state's latest renewable energy tender while ConnectGen was awarded the largest, the office of Governor Andrew Cuomo announced March 13. New York awarded over 17 utility-scale solar projects for a total capacity of over 1 GW, as well as 200 MW of wind capacity. All the projects will come online in 2021-2024.

The awards represent $1 billion in state investments and bids were 23% lower than an earlier tender in 2017, Cuomo's office said.

The largest solar project awarded was ConnectGen's 270 MW South Ripley solar plus storage facility, which includes 20 MW of energy storage.

NextEra was awarded the 200 MW Garnet Energy Center solar plus storage project, which includes 20 MW of energy storage, and the 180 MW North Side Energy Center project.

Other large projects include the 120 MW Greens Corners project developed by Boralex and an 80 MW project developed by SunEast.

New York has set a target of 70% of electricity from renewable sources by 2030 and net zero carbon emissions from power generation by 2040. The state plans to rapidly expand offshore wind capacity and install 3 GW of energy storage by 2030.

Last year, New York approved the construction of a 316 MW battery storage facility with eight hours of storage capacity in Queens, New York. Located at the Ravenswood Generating Station on Long Island City, the battery will be the largest ever built in New York.

New York must also reform its siting and permitting regulations for solar projects to ensure developers can meet project deadlines, the Solar Energy Industry Association (SEIA) warned said in a statement.

"Without streamlined processes, it could take several years for these projects to come online, delaying payback periods and stymieing market growth. Governor Cuomo has advanced a solid proposal to fast track solar projects, but we need the legislature to get this over the finish line and put these principles into practice," the SEIA said.

UK reopens solar subsidies to hit net zero carbon target

The UK government has reopened subsidies for solar and onshore wind projects after a four-year moratorium which has favored less mature technologies like offshore wind.

From next year, PV and onshore wind projects will once again be able to bid for UK contracts for difference (CfDs), the government said March 2. The move will help the UK achieve its target of net zero carbon by 2050, it said.

"We are aware of a number of projects (mainly solar PV and onshore wind) that have deployed or are planning to deploy on a merchant basis since the last [auction for these technologies] was held," the government said in a consultation document.

"However, there is a risk that if we were to rely on merchant deployment of these technologies alone at this point in time, we may not see the rate and scale of new projects needed in the near-term to support decarbonization of the power sector and meet the net zero commitment at low cost," it said.

According to the government, some of the projects will be able to secure CfDs at strike prices below the average expected wholesale price of electricity, resulting in net pay back to the state.

"Therefore, running an allocation round in 2021 which includes established technologies will help deliver a diverse generation mix at low cost, as well as give a clearer signal of the costs of these technologies, several years on from the previous auction," it said.

Global demand for replacement inverters to hike 40% in 2020

Global demand for replacement inverters is forecast to grow by 40% in 2020 to 8.7 GW following a sharp rise in installed PV capacity and as components age and lower quality units are swapped out, research company IHS Markit said in a report published March 3. Clearly, these forecasts may be revised due to the escalating global coronavirus pandemic.

Europe Middle East and Africa (EMEA) is currently the largest market for replacement inverters, recording 3.4 GW of demand in 2019, IHS Markit said.

Asia will increase its share of the replacement inverter market in the coming years, driven primarily by recent utility-scale growth in China and demand from Japan's residential and commercial solar segments, it said.

In the Americas, demand for replacement inverters is expected to grow at a compound annual growth rate (CAGR) of 130% between 2018 and 2023, primarily due to continuing growth in US installations. By 2023, the Americas will represent 12% of global replacement inverter demand.

US market consolidation has seen some large inverter suppliers exit the market, creating opportunities for smaller suppliers, IHS Markit noted.

While evolving technical regulations and import tariffs could lead to more suppliers exiting the market, the US remains a "highly lucrative" market as asset owners maintain a growing installed base of aging systems, particularly in the utility-scale sector, it said.

New Energy Update

As solar fleets age, operators are increasingly looking to repower their assets to improve competitiveness.

A key focus area for operators is the upgrade of inverters, the primary source of solar plant downtime.

Global demand for replacement inverters is forecast to grow by 40% in 2020 to 8.7 GW, over half of which will be in Europe Middle East and Africa (EMEA), research group IHS Markit said in a new report.

    Europe annual PV installations by country

                               (Click image to enlarge)

Source: European Commission's PV Status Report 2017.

Inverters typically represent 5 to 10% of project costs and new designs can boost performance and provide additional reliability and maintenance benefits. Modern inverters offer improved access, higher voltage, monitoring, and autonomous control functionality. In some cases, operators may choose to switch from large central inverters to string inverter systems.

To minimize upgrade risks, operators must perform a health check of the full solar facility with future components in mind, experts told the conference on March 5.

Other key decision drivers should include parts availability, supplier stability and looming technological advances, the experts said.

Performance focus

UK asset management group Gresham House recently assessed inverter repowering options at four of its oldest PV sites, two of which use central inverters while two use string inverters, John O'Toole, Technical Director at Gresham House, said.

"We are focusing first on the central inverters because they have the biggest impact on downtime," he said.

                              US solar O&M costs by category (2018)

Source: U.S. National Renewable Energy Laboratory (NREL).

At one of the sites, Gresham House chose to replace two 500 kW central inverters with string inverters, largely due to extra cabling requirements for a new central inverter.

"That's probably what we are likely to do on the second site," O'Toole said. "It's a very site-specific question...The approach is slightly different for each due to layout and configuration changes."

Inverter replacements can require additional component upgrades, O'Toole noted.

To replace the central inverter with string inverters, Gresham house had to replace transformers and cabling at the original combiner boxes, he said.

Holistic view

Operators must conduct a comprehensive performance analysis of the solar facility when making repowering decisions, as new components can introduce new sensitivities, Nicola Waters, Managing Director at UK O&M group PSH Operations, told the conference. PSH performed around 45 MW of repowering projects last year.

Other key considerations include electrical configurations, permitting and grid requirements, physical access and requirements of manufacturers down the supply chain, Waters said.

In one example, PSH replaced a 1.25 MWp central inverter that was underperforming due to poor EPC design, with a 2.2 MWp inverter. PSH typically assumes a budget of 60,000-90,000 pounds per MW ($71,000-$107,000/MW) for a central-to-central inverter replacement and this particular project increased the performance ratio (PR) by around 4.1%.

Testing the existing solar field revealed cable faults that hadn't been identified through preventative maintenance, Waters said.

"Doing a full field test before...thinking about the future-- what systems are going to be in there in the future-- is so, so important," she said.

The careful planning of deliveries to avoid unnecessary costs for on-site staff, involvement of the monitoring company in the project and salvaging of unused equipment also aided efficiency, Waters said.

"It's worth trying to salvage any equipment…Think about where else you might be able to use it, can you recycle it, can you upcycle it even, that's becoming more important, especially as more manufacturers are using generic parts," she said.

Future supply

Market consolidation has also been a key driver of inverter decisions as operators favor suppliers with stable outlooks and supply chain access.

"Replacement inverters of old generation inverters may simply not be available anymore," IHS Markit said in its report.

To mitigate these risks, O&M providers are developing specialist in-house inverter expertise and warehousing inventories of spare parts, it said.

At one of its central inverter sites, Gresham House chose to implement optimization add-ons rather than repower, based on stronger inverter performance and the expectation of a stable supply chain for the next five or 10 years, O'Toole said.

"The string inverter sites have a supply chain which can basically maintain the existing fleet of inverters for some time, once that supply chain starts to dry up then I think we will quickly reconsider replacement of those inverters," he said.

Disruptive gains

Operators must also take into account ongoing advances in inverter technology when deciding the timing of repowering.

"Technology is improving very quickly, they are designing new central inverters which can be switched out and the parts can be replaced like you have a string inverter inside the central inverter," Waters said.

"It might be worth in some cases waiting for that technology to come through... If you are not desperate to get that uplift right now," she said.

Operators may also want to use new lease models that manufacturers are set to offer going forward.

These may suit "some cases, where big repowering is on the cards," Waters said.

New Energy Update

Coronavirus cuts PV demand as Europe hit hard

The impact of the coronavirus pandemic on the global solar industry has shifted from a supply problem to a demand problem, as travel restrictions delay projects and economic uncertainty curbs investment activity.

IHS Markit now predicts annual global PV installations will fall 16% this year to 105 GW, the research group said March 31.

Europe could see a much larger drop, IHS Markit said. Previously, the group had predicted installations in Europe would rise by 5% in 2020 to 24 GW and Spain, Germany, Netherlands, France, Italy and Ukraine would account for 63% of demand.

Chinese solar manufacturing has resumed and could reach full capacity by mid-2020, but travel restrictions imposed by most major solar markets have delayed projects and cut short-term demand, IHS Markit said in its latest statement.

"Almost all large projects originally planned for completion in H1 2020 will be impacted in some way, and roof-top installations will grind to a halt. COVID-19 will also severely hit the planning and kicking-off of new projects in H2 2020," it said

IHS Markit predicts travel restrictions will be gradually lifted throughout the summer and solar activity will pick up in the second half of the year.

"However, the severity of the global economic downturn triggered by the pandemic will prevent a rapid recovery this year...the general financial environment will impact heavily on demand for all types of PV systems," it noted.

Following short-term disruption, IHS Markit predicts installation growth will resume from 2021 on the same growth trajectory that PV has seen over the last decade.

"Despite this major global health and economic crisis, we believe the mid-term fundamentals for solar PV growth continue to be strong, including continued cost reduction, the need for greater resilience and autonomy, low-carbon energy generation, distributed generation, and scalability," it said.

On March 26, the European Council of ministers called on the Council, the European Commission (EC) and the European Central Bank (ECB) to integrate the green transition into a compressive recovery plan for the COVID-19 pandemic. This will require a coordinated exit strategy and "unprecedented investment," the ministers said.

Germany loosens installation deadlines, retains tender dates

Solar developers in Germany will be allowed to apply for extensions to construction deadlines following the supply chain disruption caused by the coronavirus pandemic, Germany's energy regulator Bundesnetzagentur (BNetzA) said March 23.

As the coronavirus spreads across Europe, supply interruptions and travel restrictions have delayed projects. BNetzA is aiming to limit the penalties incurred by developers.

The dates of future renewable energy tenders in Germany remain unchanged, for now, BNetzA said.

Germany allocated 300 MW of new solar projects in March and will tender for a further 150 MW in June, followed by 300 MW in July, 400 MW in September, 150 MW in October and 400 MW in December.

BNetzA will inform the tender winners but will not publish the results online or enforce implementation deadlines until after the impact of the coronavirus has softened, the agency said.

In the Netherlands, solar and wind industry associations Holland Solar, NVDE and NWEA have called on the government to extend deadlines for project decisions by one-year.

Travel restrictions were impacting project schedules, Holland Solar said in a statement March 26.

"The shortage of manpower is the biggest problem and to a lesser extent the shortage of material," the trade group said.

Chinese solar manufacturing is ramping up and most solar power installers in the Netherlands have enough stock for about three months, allowing them to bridge the supply gap, it said.

US solar sector calls for coronavirus aid to minimize job losses

The impact of coronavirus on the US solar industry is deepening as the pandemic spreads across the country, the US Solar Energy Industry Association (SEIA) has warned.

The worsening pandemic has led to supply chain interruptions and labor shortages and 40% of solar companies had reported a reduction in workforce by March 26, a survey by SEIA showed.

Key concerns for solar companies include delays to project construction, supply chains and permitting, and a slump in customer acquisitions, SEIA said.

More than 63% of respondents were concerned they couldn't get access to tax equity, it said.

Congress failed to include explicit support measures for renewable energy companies in a new $2 trillion coronavirus aid package agreed March 25. Solar, wind and hydro industry groups had called on Congress to extend tax credit deadlines for renewable energy projects to prevent mass job losses.

"We are working with Congress to find solutions," SEIA said March 26.

Before the crisis, US solar employment was forecast to rise by 7.8% this year to 269,500 jobs as new installations soared to record levels, the Solar Foundation said in its National Solar Jobs Census in February. Annual solar PV installations were forecast to rise by 47% in 2020 to almost 20 GW, SEIA and Wood Mackenzie said in a joint report. Growth would mainly be driven by the utility-scale market and total annual installations were expected to creep above 20 GW in 2021, SEIA said.

Employment in solar installation, the largest job sector, was expected to grow by 9.5% this year, adding around 15,000 jobs to the US economy, the Census showed. Employment in operations and maintenance (O&M) was expected to rise by 4%, equivalent to 463 new jobs nationwide, it said.

                    US solar installation forecast before coronavirus pandemic

                                                              (Click image to enlarge)

Source: SEIA, Wood Mackenzie

"This once again is testing our industry’s resilience, but we believe, over the long run, we are well positioned to outcompete incumbent generators...and to continue growing our market share,” SEIA said.

Coronavirus lockdowns slice power demand, hike renewables share

The escalating coronavirus pandemic has sliced power demand in Europe and the US, pushing down prices and increasing renewable energy share, data from grid operators show.

The closure of factories and offices has reduced business power demand and this has not been offset by residential demand. In some countries, travel restrictions could tighten in the coming days and weeks, further impacting power demand and asset operations.

In Germany, a manufacturing powerhouse, industrial demand could fall by up to 20% this year due to the coronavirus crisis, reducing power prices by as much as 7.8%, Enervis energy consultancy said. The share of renewable energy could rise from 42% to 45% this year, it said.

In the UK, the lockdown of all but essential workers reduced power demand by around 10%, increasing the share of renewable energy and putting some gas plants out of the money, the national grid said.

In France, national power demand has fallen 15% since self-distancing measures were put in place, national grid operator RTE said March 19. On March 17, France ordered people to stay at home unless they had to perform essential duties, after the closure of bars, restaurants and non-essential shops failed to limit congregations. On March 23, France enforced perimeter limits on civilians.

The lockdown has shifted daily demand patterns, creating challenges for forecasters, RTE said.

"There is no reference scenario that allows us to predict day-ahead demand as accurately as usual...RTE forecasters are having to adjust their forecasts in real-time," it said.

French power demand is rising more gradually than normal during the morning, hitting a lunchtime peak around 13:00 local time, then falling more sharply than usual in the afternoon ahead of the evening peak period, the grid operator said.

                               French power demand before, after lockdown

                                                            (Click image to enlarge)

Source: RTE (France's national grid operator)

In Italy, where coronavirus fatalities have soared, power demand fell by up to 9% following a nationwide quarantine March 13, according to S&P Global Platts Analytics.

In the U.S. ISO New England region, changes in behavior following the coronavirus outbreak had reduced power demand by 3 to 5% compared with normal levels, ISO New England said March 31.

"Our forecasters are seeing load patterns that resemble those of snow days, when schools are closed and many are home during the day. These patterns include a slower than normal ramp of usage in the morning, and increased energy use in the afternoon," the ISO said in an earlier statement.

"Though the pandemic is affecting energy usage, weather conditions remain the primary drivers of system demand," the operator noted.

"We will continuously monitor these ever-changing trends in load patterns, and make the appropriate adjustments to calculate an accurate load forecast," it said.

New Energy Update 

As demand for bifacial panels takes off, early field learnings are seen as critical to optimizing performance.

Bifacial panels are forecast to represent 17% of the global solar market by 2024, Wood Mackenzie said in a recent report. Some 30% of new U.S. utility-scale projects will use bifacial systems by 2025, according to the US National Renewable Energy Laboratory (NREL).

A new study by German developer Enerparc shows how optimization of key bifacial parameters such as albedo (ground reflectance) and tilt angles can significantly boost power production.

Over a year, Enerparc studied the performance of bifacial panels at an operational solar facility in southern Germany. Enerparc has developed over 3 GW of PV projects globally, including over 1 GW in Germany.

The study showed that for plants with fixed structures, high ground coverage ratios and a typical albedo of around 20%, bifacial modules can increase output by 4%, Miriam Guari Borrull, Systems Engineer at Enerparc, told the conference in Munich on March 6.

Bifacial modules introduce a greater number of performance variables and some are key to boosting output.

Operators can double the bifacial gains by using commonly-available materials like gravel to improve ground reflectance, Borrull said.

"When we [use] an artificial albedo we [found] a simulated bifacial gain of 8%," she said.

Winter boost

To perform the tests, Enerparc installed 10 strings of bifacial modules under the same conditions as monofacial modules.

Enerparc used standard row layouts and simple and proven installation methods and assumed a fixed tariff revenue arrangement.

The bifacial modules had 290 W frontside power and 75% bifaciality. The modules were fixed using standard mounting structures at a height of 0.7 meters, a base case tilt angle of 20 degrees and 3.5 m row spacing.

The ground coverage ratio was 65% and albedo (ground reflectance) was measured at 17%.

Over the whole year, the bifacial gain was 4%, but this rose to over 7% during winter, Borrull said.

Gains increased in the winter due to lower temperatures, higher levels of diffuse irradiance which reaches the rear side of the module, and snow coverage, she said.

Some developers are now exploring bifacial projects in northern regions of Europe and North America to capitalize on the high reflectance qualities of snow.

As fixed tariff subsidies expire in the coming years, bifacial plant operators could take greater advantage of higher wholesale prices in the winter.

                   Average wholesale power prices in Central Western Europe

                                                           (Click image to enlarge)

Source: European Commission's quarterly electricity market report

Revenue bounce

In its tests, Enerparc found that the type of ground surface has a dramatic impact on the albedo and the gain in output was directly proportional to the increase in albedo, Borrull said.

Fresh snow was estimated to have an albedo of around 80 to 95%, compared with 15 to 25% for green grass and 10 to 20% for bare soil, she said.

For sites with similar conditions, operators might look to use quartz-sand gravel, limestone gravel or open-pored concrete to increase albedo, Borrull said.

"Of course you have to keep in mind biodiversity and which material you have available [close by]," she said.

In the U.S., NREL is currently developing the first ever database of albedo values for different regions and different types of ground surface.

Data collected will include types of vegetation and soil, data from surface radiation, CO2, water and energy flux networks.

Another key performance driver is the tilt angle of the modules and the optimum tilt angle depended on the ground coverage ratio of the modules, Borrull said.

For a 30% ground coverage ratio, the optimum tilt angle was around 30 to 40 degrees while for a 55% ground coverage ratio, the optimum tilt angle was around 20 degrees, she said.

Future uses

Creative installation of bifacial modules could open up new deployment opportunities.

"There are lots of different use cases. One case could be dual-use of the available area, for example agri-PV," Armin Scherl, Head of System Engineering at Enerparc, told the conference.

PV panels can even be installed vertically, for example to serve as fences or noise prevention, and this can have additional benefits, Scherl said.

The vertical installation of PV panels facing east-west can help to match up supply with peak demand periods—and higher wholesale prices-- in the morning and evening, he said.

"The feed in curve comes really close to the curve of demand-- with the morning and the afternoon peak," Scherl said.

"This could make sense for the future...where we sell energy on the spot market and not on fixed tariffs," he said.

New Energy Update 

On March 28, Spain tightened nationwide coronavirus restrictions, prohibiting all "non-essential" outside work, including construction, for two weeks.

The move came as Spain's daily coronavirus mortality rate rose above 800 and its total death toll was the second-highest in the world after Italy. Some experts predict European nations will require lockdowns of varying severity for months.

Spain's solar sector has been booming as developers race to meet construction deadlines and falling costs spur unsubsidized projects. Prior to the crisis, Spain was forecast to install 3.5 to 4 GW/year of new capacity in the next five years, according to SolarPower Europe.

Following the latest lockdown, project partners are working together to limit delays and maintain the integrity of the industry.

Spanish utility Iberdrola will now halt construction work on six new projects it is developing in Extremadura, the company told New Energy Update.

However, the company will continue planning for this 2 GW of new capacity and is implementing measures to minimize job losses down the supply chain, the company said.

Iberdrola is "supporting our suppliers so that they are not forced to take measures that could be irreparable to their future activity," it said.

Common objective

Spain's solar suppliers are aligning company and worker goals to minimize the length of project delays, Jose Donoso, chief executive of Spanish solar industry group UNEF, told New Energy Update.

Iberdrola does not expect significant delays to projects currently under construction, the company said.

Spanish solar companies are adopting smart home-working practices and workers unable to work are required to take paid holiday for the initial 15-day period, Donoso said.

When the crisis is over, employees will be required to make up the lost hours of work, presumably through overtime or not taking paid holiday, he said.

This will enable companies to minimize delays and limit the impact on worker income, he said.

There is a general understanding along the supply chain that force majeure will apply during the coronavirus crisis, Donoso said.

Depending on the contract, force-majeure can excuse non-performance, adjust commercial terms according to market conditions, or in some cases, terminate the contract.

Subsidy payments will also remain valid, despite project disruption, Donoso added.

“All parties involved in contracts will understand it,” he said.

Projects developed without subsidized tariffs could face greater challenges in the coming months as developers seek to secure long-term power purchase agreements (PPAs) with businesses amid an uncertain economic outlook.

Critical operations

The latest restrictions also allow "essential" operations and maintenance (O&M) to continue at existing solar plants.

Iberdrola is able to continue O&M activities at its operational solar assets, the company said.

“The company has established a rigorous health and safety system, aligned and coordinated with the administrations responsible," the spokesperson said.

O&M workers in Spain are encouraged to travel in single occupancy vehicles and are provided with personal protection equipment, including masks and gloves, UNEF said in a statement March 24.

The staff are given documents approving their right to move around during the day and operators are using remote online monitoring tools to minimize labor needs, it said.

Grid-ready

After rapid construction last year, Iberdrola's giant 500 MW Nunez de Balboa PV project is now set to start commercial operations slightly later than planned.

Europe's largest solar facility, Nunez de Balboa is located on a 2,470-acre (1,000-hectare) site in western Extremadura and was due online in Q1. Funded by European and Spanish banks, the facility is expected to produce 832 GWh of power per year and Iberdrola has signed long-term power purchase agreements (PPAs) with Kutxabank, telecoms group Euskaltel and supermarket group Uvesco. The remainder of the power will be sold to retail customers or the wholesale market.

Construction was completed in December and Iberdrola has completed all testing, including energization, and set up the O&M team, the company told New Energy Update.

Iberdrola is now awaiting one single registration document before it can start operating the plant.

“This procedure could be temporarily affected by the [coronavirus] alarm status, but we do not foresee [a significant] impact from this situation in our renewable development plans,” the company said.

By Neil Ford

Half of US solar workers impacted by COVID-19 cuts, survey shows

Some 55% of US solar workers have been laid off or are working at reduced hours or lower pay due to the ongoing COVID-19 pandemic, according to a survey performed by the US Solar Energy Industry Association (SEIA).

The findings are based on a survey conducted between March 22 and April 10. The participants represented 34,000 jobs, around 15% of the solar workforce.

          Impact of COVID-19 on US solar jobs

                                 (Click image to enlarge)

Source: Solar Energy Industry Association (SEIA)

Late last month, SEIA said 40% of solar companies had reduced their staff numbers and warned the situation was worsening.

Since the outbreak of the virus, Wood Mackenzie Power & Renewables has reduced its US solar market outlook for 2020 by 18%, from 19.6 GW to 16.0 GW.

Before the crisis, US solar employment was forecast to rise by 7.8% this year to 269,500 jobs as new installations soared to record levels, the Solar Foundation said in its National Solar Jobs Census in February.

Employment in solar installation, the largest job sector, was expected to grow by 9.5% this year, adding around 15,000 jobs to the US economy, the Census showed. Employment in operations and maintenance (O&M) was expected to rise by 4%, equivalent to 463 new jobs nationwide, it said.

"This once again is testing our industry’s resilience, but we believe, over the long run, we are well positioned to outcompete incumbent generators...and to continue growing our market share,” SEIA said last month.

UK solar output hits new record as lockdowns cut pollution

Reductions in pollution due to the COVID-19 lockdown helped UK solar production hit record levels on April 20, the UK Solar Trade Association (STA) said.

Solar supply peaked at 9.68 GW at 12:30 local time, surpassing the previous record of 9.55 GW set on May 14, 2019.

“Ideal weather conditions and lower levels of pollution than normal mean solar is providing record levels of cheap, clean power to the grid," STA said.

Across Europe, COVID-19 lockdowns have sliced power demand, increased the share of renewable energy, and depressed prices.

                Impact of COVID-19 on UK power demand (April 14)

                                                         (Click image to enlarge)

Source: UK National Grid ESO

At its peak, solar power supplied almost a third of UK electricity and had helped keep coal-fired power stations offline for 11.5 consecutive days, STA said. This could increase further in the coming days.

"As the lockdown and good weather continues, it is expected that more solar generation records will be broken," it said.

New Energy Update

The COVID-19 crisis has created both supply and demand problems for PV component suppliers.

Lockdowns and travel restrictions have severely disrupted supply chains and delayed new projects, slicing demand outlooks.

Analysis group IHS Markit now predicts annual global PV installations will fall 16% this year to 105 GW, the research group said March 31.

Europe could see a much larger drop, IHS Markit said. Previously, the group had predicted installations in Europe would rise by 5% in 2020 to 24 GW.

       Global annual PV installations by region

                                (Click image to enlarge)

Source: IHS Markit, March 2020

Leading inverter suppliers like Germany’s SMA Solar and Spain’s Power Electronics are adapting their businesses to meet the short and long-term challenges of the COVID-19 crisis.

SMA's inverter orders were strong before the crisis and is maintaining full output capacity. The company still expects to sell 14 to 15 GW of inverters this year, compared with 11.4 GW in 2019, Ulrich Hadding, CFO of SMA, told New Energy Update.

The pandemic will "certainly have an impact on demand over the next three to four months, after which we expect a strong recovery," Hadding said.

Power Electronics, the largest supplier of inverters to US utility-scale projects, is also maintaining its 2020 US outlook, at 12 GW, a similar level to 2019 when early safe harbour orders to meet tax credit deadlines boosted order numbers.

"It’s hard to say how packed Q3 and Q4 will become, or how compacted Q4 will be if we see too many push outs into that quarter...this is uncharted territory for all of us," Ron Puryear, Vice President and General Manager of Power Electronics, said.

"The secret sauce will be whether or not the panels can catch up to the project time lines," Puryear said.

IHS Markit expects a ”limited overspill” of US utility-scale projects to shift from H2 2020 to H1 2021, Cormac Gilligan, an associate director at IHS Markit, said.

Developers and EPCs are likely to safe harbour key components in a similar way to 2019 to fulfil end of year tax credit deadlines, he said.

Securing parts

Component supply remains a challenge for inverter groups and SMA has activated "second source" suppliers in countries and regions that are less affected by COVID-19 restrictions," Hadding said.

Transport capacity limitations have increased costs, he warned.

Grounded passenger flights have severely curbed air freight options while sea freight container capacity is also limited, Hadding said.

The company is working closely with suppliers to find solutions, he said.

"Typically, air freight costs negatively impact gross margins in the low single digits in gross margins terms," Miguel De Jesus, a solar market analyst at IHS Markit, told New Energy Update.

Power Electronics sources components from Europe, where most countries have been locked down for weeks.

For now, Power Electronics is running its US factory in Arizona at full capacity, Puryear said.

The US division holds a large inventory of components and is well-placed "to weather the storm, but not if things remain locked down for another month or two," he said.

Spain and Italy have seen the greatest number of factory closures and most European countries are starting to ease restrictions as death tolls soften. On April 13, the Spanish government allowed manufacturing and construction to restart after a two-week ban of all non-essential work.

"We seem to be in good shape with our current suppliers keeping up," Puryear said.

Full output

Along with common measures such as face masks, SMA has adapted production processes to protect employees and maintain 100% production capacity.

Using flexible working arrangements, SMA is able to adjust production at short notice and fulfil customer orders, Hadding said.

"Our production has been highly flexible even before the crisis...we are working with temporary workers, etc," he said.

"Even in Europe...many PV inverter manufacturers have been able to maintain manufacturing levels with limited to no disruption due to their businesses being associated with critical businesses such as energy," De Jesus said.

To minimize the financial impact, SMA has taken advantage of liquidity protection measures introduced by various countries, including measures that delay tax and social security payments, Hadding said.

"Those measures will be upheld as long as legally feasible," he said.

Price impact

Experts predict the ongoing COVID-19 crisis will lead to slower falls in inverter prices than seen in previous years.

"As PV inverter prices are already at low levels, IHS Markit forecasts price declines of 10% year on year...in some years historically, price reductions have exceeded 20%," Gilligan said.

"The planned decline of our sales prices might soften a bit, for specific products in certain countries we might even see price increases," Hadding said.

The inverter market has seen significant consolidation in recent years. Suppliers such as Advanced Energy, Satcon, Bonfiglioli and Bosch have exited the market while Siemens and Fimer have both acquired inverter businesses.

Hadding predicts further consolidation in the inverter supply chain in the coming years.

"It will become more difficult to keep up a smooth supply chain. Supply security will get a higher priority compared to low prices," he noted.

"Given the rapid reduction of demand in certain markets globally, it is expected that some consolidation will occur and suppliers will consider numerous options such as divestment, mergers or full exit," Gilligan said.

Survival strategy

For the wider PV sector, the swamping effect of the COVID-19 pandemic risks demoting the importance of the global climate challenge.

The increasing competitiveness of solar power plants will help companies tackle the long-term challenges and green deals between governments and the private sector could help accelerate the wider recovery.

Despite the current challenges, SMA is maintaining its 2020 financial outlook of a sales increase of 1.0 to 1.1 billion euros ($1.1-$1.2 billion) and EBITDA increase of 50 to 80 million euros. Going forward, the company is implementing additional measures to improve the flexibility and cost effectiveness of its operations, Hadding said.

As the renewable energy market grows, diversification will be key to ensure business stability.

"We see good growth potential over the coming years for SMA in the field of digital energy solutions, but also storage system technology, and services such as operations and maintenance (O&M) for utility-scale PV power plants," he said.

For Power Electronics, key growth markets include energy storage and electric vehicles.

"Our move into the electric vehicle business has been a good one, we have big long term plans here," Puryear said.

New Energy Update 

PV price drop set to continue as cells improve

PV prices will continue to fall based on historic learning rates of over 23% in the coming years, due to improvements in wafer and cell performance, advances in bifacial cells and improved layouts, according to the latest annual Photovoltaic Roadmap (ITRPV), published by German engineering industry group VDMA.

This implies selling prices will fall by over 23% for every doubling in cumulative PV shipments.

The ITRPV summarizes over 100 parameters along the crystalline silicon (c-Si) PV value chain, using insights from 57 leading international PV component suppliers.

Monocrystalline silicon (mono-Si) wafers will represent 75% of the market in 2020 and this share will grow in the coming years, the report said.

By 2030, multi-crystalline silicon (mc-Si) wafers will represent only 5% of the market, it said.

Wafer sizes will continue to rise and efficiencies of PERC p-type mono-Si modules are forecast to rise from 203 W/m² in 2020 to 225 W/m² in 2030, the report said. N-type cell concepts could be 5 W/m² higher, it said.

Heterojunction technology (HJT) modules will achieve area efficiencies of 210 W/m² in 2020 and will outperform other c-Si module types to reach close to 240 W/m² within 10 years, it said.

Trina Solar's new large module certified at 516 W

Trina Solar's new 500 W module has been certified by German independent testing group TUV Rheinland at a power output of 516 W and 600 W models are on the horizon, the Chinese group announced April 24.

Trina started commercial production of its new "Vertex" large module on March 18 and shipped its first order on March 27, the company said.

“With the development and improvement of the industry chain, especially the improvement in glass supply capacity, adding another column of cells to the existing five-column layout design can increase the Vertex module’s power output to more than 600W," Yin Rongfang, Vice General Manager and EVP at Trina Solar said in a statement.

Rising PERC+ cell conversion efficiency combined with optimized module design and installation will drive further increases in power output, Rongfang said.

"This provides the direction and path for the iterative development of PV modules, which will further drive the continuous decrease in the balance of system (BoS) and levelized cost of energy (LCOE) of PV systems,” he said.

Global inverter shipments rise 18% in 2019

Global PV inverter shipments grew by 18% in 2019 as US developers safe-harbored inverters to meet tax credit deadlines and replacement activity climbed, Wood Mackenzie said in a new report.

The top five inverter vendors-- Huawei, Sungrow, SMA, Power Electronics and Fimer-- retained around 56% of the global inverter market, Wood Mackenzie said. The top 10 suppliers retained a market share of around 76%, it said.

                                   Global inverter shipments in 2019

                                                               (Click image to enlarge)

Source: Wood Mackenzie

The COVID-19 outbreak has severely disrupted solar supply chains and delayed new projects. Analysis group IHS Markit now predicts annual global PV installations will fall 16% this year to 105 GW, the research group said March 31.

Amid COVID-19 lockdowns, inverter suppliers have been working hard to maximize output.

SMA's inverter orders were strong before the crisis and is maintaining full output capacity, Ulrich Hadding, CFO of SMA, told New Energy Update last month.

The company still expects to sell 14 to 15 GW of inverters this year, compared with 11.4 GW in 2019, Hadding said.

The pandemic will "certainly have an impact on demand over the next three to four months, after which we expect a strong recovery," Hadding said.

Power Electronics, the largest supplier of inverters to US utility-scale projects, is also maintaining its 2020 US outlook, at 12 GW, a similar level to 2019 when early safe-harbor orders to meet tax credit deadlines boosted order numbers.

Reduced transport and supply chain options are increasing inverter costs and this will lead to slower falls in prices than seen in previous years, suppliers warn.

"As PV inverter prices are already at low levels, IHS Markit forecasts price declines of 10% year on year...in some years historically, price reductions have exceeded 20%," Cormac Gilligan, an associate director at IHS Markit, said.

"The planned decline of our sales prices might soften a bit, for specific products in certain countries we might even see price increases," Hadding said.

New Energy Update

COVID-19 restrictions are impacting short and long-term strategies of wind and solar developers.

In Europe and US, factory closures have cut demand and short-term power prices. Supply chain disruptions have delayed project schedules and increased costs.

The pandemic is also delaying the signing of long-term power purchase agreements [PPAs] critical for most large-scale renewable energy projects.

PPA demand was surging before the crisis but business closures and the looming global downturn is impacting credit ratings and lower power demand has created uncertainty over future wholesale prices.

      UK spot power prices in 2020 versus historic

                                (Click image to enlarge)

Source: NordPool

Amid the uncertainty, companies are postponing PPA decisions or negotiating for better terms, Paolo Ghezzo, Head of Renewables Independent Engineering at consultants RINA, told New Energy Update.

Prices must be high enough to mitigate offtaker risks and many developers may wait for prices to recover more towards pre-COVID-19 levels, Martin Scharrer, Head of Legal (Energy & Investments) at German solar and wind power investor Encavis, said.

“Projects are not as attractive as they need to be for investors, especially purely financial investors,” Scharrer said.

"It might take some time until we are back to the prices before Corona," he warned.

Group effort

The economic fallout of COVID-19 will impact the creditworthiness of offtakers large and small. Risks will differ between country and sector.

Large corporates with strong balance sheets led early growth in renewable energy PPAs, but falling wind and solar costs have enticed a wider range of smaller, riskier offtakers into the market.

In 2018, 75 companies entered into corporate renewable energy PPAs in the US, compared with 31 in 2017, according to the Rocky Mountain Institute's Business Renewables Center (BRC).

Increasing use of layered PPA structures which aggregate demand from a number of offtakers could help mitigate risks, Daria Nochevnik, Principal Advisor at ECS Consulting, said.

Layered PPA structures allow smaller firms to buy power from larger projects, or spread risk across a range of different renewable assets, Nochevnik, also a communication lead at the European Federation of Energy Traders (EFET), said.

Many smaller firms seek shorter PPA contracts and this has spurred the layering of multiple contract tenors, requiring an in-depth understanding of regional power trends. The spread between PPA and wholesale prices varies between country, depending on market-specific factors such as liquidity and national regulation.

Utility squeeze

The credit risk of utilities—major buyers of renewable energy-- is also under pressure, Uday Varadarajan, Principal, Electricity at Rocky Mountain Institute (RMI), told New Energy Update.

The impact on the utility depends on the regulatory regime it operates in and its exposure to COVID-hit companies, Varadarajan said.

“If the regulatory regime includes measures to decouple the volume of consumption from total collections in a timely fashion, then the utility’s revenues are likely to be resilient to this crisis in the near term - and the counterparty risk is likely to be minimal”, he said.

If a prolonged downturn prevents customers from paying their bills, liquidity becomes an issue, Varadarajan said.

“This could be a concern for utilities like Pacific Gas & Electric (PG&E), already reeling from recent events”, he said.

PG&E filed for Chapter 11 bankruptcy protection in January 2019 after several deadly wildfires left it with billions of dollars of potential liabilities.

The Californian utility is offtaker for Berkshire Hathaway's 550 MW Topaz PV plant in San Luis Obispo County. On April 22, Fitch Ratings affirmed senior notes for the facility at "C," a very high level of credit risk, due to its exposure to PG&E.

"Material changes in revenue and cost profile are occurring across the power sector in the U.S. and likely to worsen in the coming weeks and months as economic activity suffers and government restrictions are maintained or expanded," Fitch warned.

Tighter contracts

The COVID-19 crisis will bring greater scrutiny of PPA contracts, particularly in the negotiation of force majeure clauses, Scharrer said.

Companies may look to extend the period for which counterparties under force majeure are unable to terminate the contract, typically set at around 180 days, Scharrer said. Contracts may also include greater detail on risks from health and safety issues, he said.

Legal mechanisms of force majeure claims will become more prominent, while pandemic insurance options may also be introduced, Nochevnik said.

More standardization of contract terms across the industry should help mitigate risks and speed up negotiations.

Last year, EFET launched a new standard corporate power purchase agreement (CPPA) which includes terms on force majeure, change of law and termination due to non-delivery or insolvency.

Long view

The long-term impact of COVID-19 on PPA demand and prices will depend on the length and breadth of the economic fallout.

Forward power markets in Europe indicate prices could return to levels seen before the pandemic in two to three years, Guy Brindley, Senior Analyst at industry group WindEurope, told New Energy Update.

If short-term prices remain low, some developers may still sign PPA contracts, confident they will still make long-term savings, Brindley said. Other project owners with adequate equity financing may take on merchant risk for two or three years then negotiate PPA contracts, he said.

Countries keen to stimulate new build activity could reintroduce short-term support measures such as feed in tariffs, Scharrer said.

"It could be useful in my opinion to get the economy bouncing back quicker...plus the countries still have to fulfil their targets for renewable energies in [their] climate action plans,” he said.

Green engine

Despite the wider economic crisis, the fundamentals behind long-term PPA growth remain strong, experts said.

Falling technology costs and sustained low cost of finance have propelled renewable energy growth and these trends will continue going forward, Oyvind Breivik, head of energy communications at aluminium group Norsk Hydro, a major buyer of renewable power, said.

“Now, we are seeing even lower interest rates, and many believe this will last for a long time,” he noted.

Based on cost, PPA activity could swing in favour of solar in the coming years, Wood Mackenzie Power and Renewables said in a report published in 2019.

Falling solar costs, battery storage synergies, and favorable solar resource profiles could see U.S. corporate demand for solar soar past wind from 2021, the research group said.

                   US corporate demand for wind, solar (aggressive forecast)

                                                          (Click image to enlarge)

Wood Mackenzie report 'Analysis of commercial and industrial [C&I] wind energy demand in the U.S,' August 2019.

Rising renewable energy targets at both a national and corporate level will continue to spur activity.

Amid the pandemic, the European Commission and European Council have reaffirmed their commitment to carbon neutrality by 2050 and pending EU-level Green Deal legislation will help support growth, Nochevnik said.

“PPAs and corporate PPAs in particular will remain a key instrument for facilitating the uptake of renewable energy in Europe in a cost-effective way," she said.

Reporting by Neil Ford

Editing by Robin Sayles

COVID-19 cuts 65,000 US solar jobs, cancels 50,000 new roles

The US solar industry has cut 65,000 jobs due to COVID-19 and cancelled the creation of around 50,000 positions, the US Solar Energy Industry Association (SEIA) said in a statement May 18.

By June, the solar workforce is expected to fall to 188,000 personnel, dragging the industry back to 2014 levels, SEIA said.

Before the crisis, US solar employment was forecast to rise to 302,000 jobs this year as new installations soared to record levels, SEIA said. The Solar Foundation was less bullish, predicting job numbers would rise by 7.8% this year to 269,500 in a pre-COVID-19 census.

Since the outbreak, worker restrictions and supply chain issues have delayed solar construction and slowed new investments.

Some 3 GW of US solar capacity is now expected to be installed in Q2, 37% lower than forecast before the pandemic, SEIA said May 18.

Since COVID-19, Wood Mackenzie Power & Renewables has reduced its 2020 US solar market outlook by 18%, from 19.6 GW to 16.0 GW.

Solar, wind and hydro industry groups have called on Congress to extend tax credit deadlines for renewable energy projects to prevent further job losses.

“Thousands of solar workers are being laid off each week, but with swift action from Congress, we know that solar can be a crucial part of our economic recovery,” Abigail Ross Hopper, president and CEO of SEIA, said in a statement.

Private equity group buys SunPower O&M business

Canadian private equity group Clairvest has acquired SunPower's solar operations and maintenance (O&M) business, Clairvest said May 14.

The new O&M company has been renamed NovaSource and Clairvest will support the O&M team in a management buyout, the company said.

NovaSource provides O&M services to 3 GW of commercial and utility-scale assets across nine countries.

“NovaSource can capitalize on our industry’s tail winds and the expected growth of installed solar assets over the next ten to fifteen years," Jack Bennett, CEO of NovaSource, said in a statement.

Pre-COVID-19, annual global solar O&M spending was forecast to double to $9.4 billion by 2024, as installed capacity grows, Wood Mackenzie Power and Renewables said in a report published in October 2019.

Annual solar installations were forecast to rise to 120 GW-125 GW in the early 2020s, driven by growth in emerging markets, WoodMac said in July 2019.

By 2022, some 19 countries were forecast to install between 1 and 5 GW of solar power per year, compared with just seven countries in 2018, WoodMac said. New growth markets include Saudi Arabia, France and Taiwan, it said.

            Forecast solar markets by annual installations (Pre-COVID-19)

Source: Wood Mackenzie Power and Renewables, July 2019.

In 2018, SunPower sold 4.7 GW of utility-scale solar projects to Clearway Energy Group, a subsidiary of Global Infrastructure Partners (GIP).

Last November, SunPower announced it would split its business into a SunPower services company and a separate panel manufacturer, renamed Maxeon Solar. On May 15, China's Tianjin Zhonghuan Semiconductor Co. received Chinese regulatory approval to invest $298 million in Maxeon Solar.

"Today's [Maxeon] announcement puts us one step closer toward creating two independent, pure play, publicly-traded companies," Tom Werner, president and CEO of SunPower said.

"Our planned transaction will allow for each company to focus on their core strengths in their respective markets around the world," he said.

Giant Nevada solar-storage project wins federal approval

Quinbrook Infrastructure Partners has received full federal approval for its groundbreaking 690 MW Gemini solar plus storage project in Nevada, the company announced May 11.

The U.S. Department of Interior has approved the $1.1 billion project, following a favorable Final Environmental Impact Statement (FEIS) in December, Quinbrook said.

“This final decision officially clears the pathway for Quinbrook, and our development partners at Arevia, to accelerate completion of detailed project designs and procurement plans for one of the world’s largest renewables projects," David Scaysbrook, Co-Founder and Managing Partner of Quinbrook, said.

Following the approval, Quinbrook launched a new company called Primergy to manage the Gemini project and develop or acquire further PV and storage projects across North America.

Located 33 miles north east of Las Vegas, the Gemini plant will include a 380 MW AC battery storage system, providing 2,125 MWh of storage capacity, proposal documents show.

Nevada utility NV Energy has agreed to purchase the entire capacity of the project under a 25-year power purchase agreement (PPA). The storage will be used to supply power in the early evening peak demand period.

NV Energy has also agreed to purchase power from the Arrow Canyon and Southern Bighorn solar plus storage projects, currently being developed by EDF Renewables North America and 8minute Energy, respectively.

US to double renewables plus storage plants by 2023

The number of US solar and wind assets co-located with batteries will double from 53 in 2019 to 109 by 2023, according to the US Energy Information Administration's latest inventory of power plants.

The number of renewables plus storage plants has tripled since 2016. Texas currently hosts almost half of this capacity and Nevada will soon rival Texas as giant projects such as Quinbrook's Gemini solar plant come online.

                          Top 10 US states for renewables plus storage 

                                                               (Click image to enlarge)

Source: U.S. Energy Information Administration (EIA), Preliminary Monthly Electric Generator Inventory

Renewables developers are building larger projects to benefit from economies of scale. The average renewable capacity at new coupled facilities is forecast to hike from 34 MW in 2019 to 75 MW by 2023 while average battery capacity will soar from 5 MW to 36 MW, EIA said.

The storage of excess energy is the most common application for co-located batteries but the majority of facilities serve more than one function, EIA noted. Frequency regulation, system peak shaving and backup power are also common applications.

New Energy Update

As solar and wind operators battle through COVID-19 restrictions, lower wholesale prices have raised concerns over future revenue streams.

In Europe and US, factory closures have cut power demand, lowered prices and increased the share of renewable energy. The signing of long-term power purchase agreements (PPAs) has slowed as the looming downturn creates uncertainty over future demand.

Higher renewable energy shares during COVID-19 have raised fresh concerns over future "price cannibalization." Wholesale power prices were already soft as growing solar and wind capacity lowers marginal generation costs. As renewables penetration grows and subsidies expire, this will impact all solar and wind projects.

   Spot power prices in Central Western Europe in Q4 2019

                                 (Click image to enlarge)

Source: European Commission's Quarterly Electricity Market Report. Data source: S&P Global Platts

On Easter Sunday, strong UK solar and wind output combined with a nationwide lockdown to push daytime intraday prices between 11:00 a.m. and 6:30 p.m. below night-time prices, Tim Dixon, Wholesale Team Leader at Cornwall Insight, said in a research note. Across Europe, negative prices and curtailments have become more frequent during the lockdowns.

"The trends observed over the weekend are perhaps a sign of things to come as we move into a world with greater levels of embedded and intermittent sources of generation," Dixon said.

"It is likely that many of these trends will be exacerbated...causing greater cannibalization and volatility in wholesale power prices," he said.

Many operators are now preparing for these risks by developing storage solutions or offering a wider range of grid services. As solar and wind capacity continues to grow, new support mechanisms may also be required.

Contract cover

Despite the current challenges, many developers remain bullish on solar and wind growth as technology gains and economies of scale bring further cost reductions. Large-scale projects are now being developed subsidy-free, typically combining PPAs with some merchant market exposure.

In Europe, the spread between PPA and wholesale prices varies between country, depending on market-specific factors such as liquidity and national regulation. As PPA liquidity grows, prices should converge towards wholesale market levels.

                                        Levelized cost of wind, solar

                                                             (Click image to enlarge)

Source: Lazard consultancy's Levelized Cost of Energy Analysis, Version 13.0 (November 2019)

Lightsource BP's solar construction pipeline remains "very strong" and the group continues to receive interest from financial investors, Adele Ara, Director of Asset Management at the UK-based developer, told New Energy Update.

Lightsource develops solar assets in Europe, North America and Asia. In Europe, the group has developed over 1.3 GW of capacity and invested $3.4 billion since 2011. The company also provides O&M services to over 2 GW of projects.

Lightsource's assets have remained "resilient" during the COVID-19 price slump due to a mix of PPAs and subsidies, Ara said.

The group’s portfolio consists of grid-connected projects supported by feed in tariffs or PPAs, and long-term behind-the-meter contracts with industrial or commercial users.

The PPAs for the grid-connected projects vary in length and are as short as 12 months for some older subsidized solar projects, Zosia Riesner, Director of Power Markets, Europe at Lightsource BP, told New Energy Update.

Smaller offtakers typically seek shorter PPA contracts and many developers of larger projects are aggregating multiple offtakers or layering multiple contract tenors to secure sales.

Lightsource's long-term behind-the-meter PPAs have some volume exposure to industrial or commercial demand, Riesner said.

"Among our customers we have factories and large energy intensive sites. During COVID-19, for some sites there has been a shutdown period where demand has reduced and that has had a volume impact, meaning either more electricity has been exported to grid or that solar farm’s output has been curtailed," she said.

The COVID-19 crisis will bring greater scrutiny of new PPA contracts, particularly in the negotiation of force majeure clauses which allow termination of contract. More standardization of contract terms across the industry should help mitigate risks and speed up negotiations.

Stacking revenues

The current demand crunch has increased the prevalence of negative prices during times of high solar and wind output, highlighting the renewables disruption underway.

As battery costs fall, operators see energy storage as a key way of reducing these price risks.

          European installed utility-scale battery capacity by country

                                                          (Click image to enlarge)

Source: European Commission's Quarterly Electricity Market Report (Q4 2019).

An increasing number of wind and solar developers are co-locating storage technologies. The number of US solar and wind assets co-located with batteries will double from 53 in 2019 to 109 by 2023, according to the US Energy Information Administration's latest inventory of power plants.

Solar developers are increasingly looking to shift peak supply to times of higher prices. Wind operators like ScottishPower are also building energy storage facilities to mitigate wind intermittency.

"Increased volatility and greater price differentials between periods of low and high demand will produce arbitrage opportunities, something that will be welcomed by storage operators and flexible generation," Dixon said in his note.

Grid services such as reactive power and frequency response offer additional revenues, provided appropriate regulation is implemented.

Reactive power maintains grid voltage levels to allow greater energy transport along existing networks, while fast frequency response helps maintain grid active power requirements.

In solar plants, operators can use inverters to adjust voltage to provide reactive power services.

In November, Lightsource became the first UK solar operator to provide reactive power services at night.

The trial was performed at Lightsource's 4 MW St Francis solar plant in East Sussex and forms part of the 'Power Potential' reactive power initiative led by National Grid ESO and UK Power Networks. The network operators plan to create a reactive power market for distributed energy that will increase capacity in the south-east by 4 GW.

"This innovative trial, which forms part of our Power Potential project, is an exciting first step," Biljana Stojkovska, project lead at National Grid ESO, said in a statement.

"We look forward to seeing it progress over the coming months as we explore new reactive power markets for distributed energy resources," Stojkovska said.

Green future

Over the long term, the overarching need to reduce carbon emissions will drive growth in solar and wind.

Amid the pandemic, the European Commission and European Council have reaffirmed their commitment to carbon neutrality by 2050 and pending EU-level Green Deal legislation will support renewables growth. Over the long term, the electrification of transport and heating sectors will apply upward pressure to power prices.

Commercial PPAs will continue to underpin solar and wind investments but if prices fall too low across crucial production hours, governments may need to re-impose support mechanisms.

EU members will likely require "revenue stabilization" measures like the UK's contract for difference (CFD) model to meet carbon reduction targets, Alessandro Boschi, Head of Renewable Energy at the European Investment Bank (EIB), told S&P Global Market Intelligence April 23.

The COVID-19 crisis could accelerate moves towards such measures as EU states look to avoid project defaults, Boschi said.

A surge of defaults would "deter investment...you don't want that to happen," he said.

Reporting by Beatrice Bedeschi

Editing by Robin Sayles

Global PV costs fall by 13% as module pressure continues

The global average levelized cost of energy (LCOE) of new solar plants fell by 13% in 2019 to $68/MWh, the International Renewable Energy Agency (IRENA) said in its latest annual Renewable Power Generation Cost report.

The average installed cost of utility-scale PV fell by 18% last year to $995/kW, the agency said.

The cost of mainstream module technology fell by 14% in 2019 to $0.27/W. Prices in December 2019 ranged from $0.21/W for low-cost modules to $0.38/W for all-black modules, it said.

PV prices will continue to fall at learning rates of over 23% in the coming years, due to improvements in wafer and cell performance, advances in bifacial cells and improved layouts, according to the latest annual Photovoltaic Roadmap (ITRPV), published by German engineering industry group VDMA last month. This implies selling prices will fall by over 23% for every doubling in cumulative PV shipments.

Data for bifacial modules has become available as more developers opt for this technology, IRENA said.

Bifacial module costs were 56% higher than mainstream mono facial modules in 2019 and 18% higher than the most expensive options, it said.

  PV module prices by technology, supplier country

                                (Click image to enlarge)

Source: IRENA's 'Renewable Power Generation Costs 2019' report.

In recent months, bifacial module costs per Watt have been "within a close range of the higher performing monofacial options," IRENA said.

"This may support expectations of increased bifacial technology adoption in the market, given its potential for increased yield per Watt, compared to monofacial technologies," it said.

Bifacial systems are lowest cost option at over 93% of sites: study

Single-axis tracker bifacial plants are the lowest-cost option for 93.1% of global solar sites on a levelized basis, according to a new study by the Solar Energy Research Institute of Singapore (SERIS), published in the journal 'Joule.'

The researchers estimated the irradiance on both side of modules for different system designs. Performance calculations were validated against actual field data and extrapolated over a 25-year lifetime.

Single-axis tracker bifacial systems can increase energy yield by 35% and reduce the levelized cost of energy (LCOE) by 16% compared with conventional monofacial systems, the study said.

"Although dual-axis tracker installations achieved the highest energy production, due to their current high costs, they only reached the lowest LCOE values for locations very close to the poles," it said.

A regional sensitivity analysis showed that factors such as weather and local cost parameters can favor non-bifacial single-axis designs, the researchers noted.

For example, land cost and shading risks were not covered in the study.

US PV life expectancy rises to 32.5 years

The average life expectancy of US utility-scale PV projects rose to 32.5 years in 2019, according to a survey of project developers and consultants by the Lawrence Berkeley National Laboratory (Berkeley Lab).

Module manufacturers now typically offer warranties of 25 or 30 years. Many plant owners expect lifespans over 35 years, while very few anticipate lifespans below 30 years, the survey showed.

Life expectations also outstrip long-term power purchase agreements (PPAs), extending the "merchant tail" period exposed to power price risks, Berkeley Lab noted.

                                       Current life expectation of US PV plants

Source: Survey by Berkeley Lab, December 2019

Estimated lifetime operational expenditure (opex) was $17,000/MW/year in 2019, compared with $35,000/MW/yr in 2007, the survey showed. The latest opex estimates range between $13,000 and $25,000/MW/yr.

Operations and maintenance (O&M) costs have fallen significantly in recent years and were estimated at between $5,000 and $8,000/MW/yr in 2019, the laboratory said.

India's Adani wins world's largest solar build program

India has awarded Adani Green Energy Limited (AGEL) 8 GW of new solar projects, the world's largest ever solar development award, AGEL said in a statement June 9.

The projects will require $6 billion of investments and will be built over a period of five years. AGEL has also committed to build 2 GW of new solar cell and module manufacturing capacity in India by 2022, the company said.

The Adani group has launched a major clean energy investment drive and the new projects will double AGEL's renewable energy capacity. The group aims to install 25 GW of renewable power capacity by 2025 and become the world's largest solar power company.

In February, French oil major Total acquired a 50% stake in AGEL's solar business for around $500 million.

Total and Adani Green Energy Limited (AGEL) would create a 50/50 joint venture into which AGEL will transfer its solar assets, consisting of 2.1 GW of operational capacity and 475 MW of capacity under development, the French group said.

India aims to increase its installed renewable energy capacity from 81 GW in 2019 to 225 GW by 2022, which includes 50 GW of large-scale hydroelectric capacity.

New Energy Update