Solar panels in Siberia? How Ukraine and Russia could lead the PV pack

Solar panels in Siberia may be an odd proposition, but decades of underinvestment makes modernising eastern Europe’s Cold War-era grid an attractive prospect for investors. But how accessible to foreign companies those markets will be is an open question.

At this summer’s Intersolar conference in San Francisco, Tomasz Slusarz from Solar PV Consulting in Brussels said that Ukraine presented a more promising outlook for outside investors than its larger neighbour Russia. Ukraine has an ambitious renewables target of 30% by 2015, triple the level in 2010, according to Reuters.

“Ukraine would like to be more independent from Russia in terms of energy supply and this also helps politicians to develop solar energy,” said Slusarz. “This is a very young market, but Ukraine has excellent conditions for PV. By 2015 they expect around 100MW of solar power and the target is around 1GW from PV.”

But politics and lack of local competencies are just two pitfalls for investors, he said.

“In Ukraine, there is a domestic company requirement and up until now there was not a lot of industry in the country so it was difficult to fulfill this. There is also no experience with the market. Even if there is a lot of expectation, experience is needed. Even when there is a good law, you need time to kick off the market.”

Slusarz also euphemistically approached the subject of good political connections in Ukraine.

“A lot of big players like Sharp are very close to the market there. Their brands are well recognized there they are trying to get good connections to develop this market. A lot of companies are now going to Ukraine to develop the opportunities. If they find good partners and understand the way to make business there the market can grow.

“The main players on the Ukrainian markets are people who have good connections with the power companies. Also in Ukraine it’s good to have good connections with the right people and very often it’s very hard to start businesses. Very often you have to find a partner in the country who has good connections and then you can start the business.”

In Russia, said Slusarz, although the potential for PV was good, cheap energy and lack of policy implementation were barriers. “Russia is the world’s biggest country -13,000km – with the biggest distance between borders. There are also a lot of areas with good insolation – but there is no market yet.”

“A year ago I would have said that we should not expect more than 200MW by 2020. However, there is a decree of the government which sets targets - but there are not yet targets for PV. It’s very difficult to fix anything in Russia.

“In Russia, politicians act like firefighters - if there’s no problem they don’t deal with it.”

But Slusarz forecast more progress. He said: “We’ve been trying to set up an association since 2005 – this year we finally succeeded. The association is working with the government to kick off the domestic market.”

But he said that investment would come from within Russia, where the market could end up being closed to foreign investors.

However, what is really important is that Russia is investing a lot of money. Renova group is the 48% of Oerlikon is investing a lot of money in the upstream and have established a $200m fund to invest in R&D.

Besides that, the government has created a joint venture fund which is investing in the solar PV industry.

“They also realize it doesn’t make sense to compete on the foreign markets. It would also be good to create some local market for themselves to have the market for their own companies.”

Interest may be further increased with one the country’s first solar PV conferences in Moscow next year.

But the advantage of still having a such a centralized economy in such a large country are clear - when Russia decides to do something, it does it on a large enough scale to make a huge difference. But foreign investment may be frozen out as Russia has done in the fossil fuel industry and decentralizing power sources is a form of decentralising power.

Slusarz said: “Russia has big market potential but – when they deal with something they deal with it in a very serious way. But I’m not sure if it will be a closed or open market. This is the discussion which I think we will be helping with.”

“There is also a very big lobby of utilities which are connected to the government and they do not support solar PV. It’s not so good for them. If we decentralise energy sources we are decentralizing the power…”

Ukraine could be more promising but risky, said Slusarz: “Ukraine is a very promising market although very risky business as a lot of investment is related to people from the government so I expect that they will try to keep for themselves as much as they want.

“There’s also quite a big financial risk far higher than in the western EU. When you speak with the financial institutions you cannot get good financing rates like you can in the western EU of 2-3%.”

Jerry Brown's 12GW distributed solar target shouts FITs from the rooftops

Jerry Brown this week restated his campaign commitment to add 12GW of new distributed generation to California’s grid.

Most of it will have to come from rooftop solar. That’s not a problem in sunny California perhaps. But it’s a tall order given that the figures for distributed generation under the California Solar Initiative currently stand at around 1GW.

It’s also a challenge because solar developers in California are now tooled up for large utility-scale installations, fuelled mainly by the state’s aggressive Renewable Portfolio Standard target of 33% by 2020.

But Jerry Brown in his 70s, appears to be just as shrewd a governor as he was in the 70s, if recent accounts from renewables analysts are anything to go by.

The US has a lot to gain from looking at European models of renewable market growth, said Daniela Schreiber at EUPD Research.

At the recent Intersolar conference in San Francisco she gave a brilliant account of the risks of asymmetrical policy frameworks and argued that Renewable Portfolio Standards, with their emphasis on utility-scale installations, were not sufficient to create a mature solar market. As utility scale installations peaked, longer-term incentives were required to boost the domestic and commercial rooftop segment.

California still led the market in the US, with 30% of installed capacity, down from 80% in 2006, she said. Desert states in recent years have raced to install solar projects, and resulted in the massive growth for 2010 of 710% in New Mexico and 430% in Arizona.

But she said these growth rates were unsustainable and represented how little solar was installed to start with - New Mexcio only had 70MW of installed capacity in 2010, for example.

These growth rates can be partly accounted for by RPS targets, she said. But reliance on only RPS puts the market in a vulnerable position without long-term incentives.

“You may argue that this is not quite sustainable because if you look at what’s behind the framework certainly the RPS is important. But if you theoretically think what if that target is reached? What will be next? In the worst-case scenario, if no more improvements were done in terms of framework, that would mean that the market would die.”

Europe had learned some painful lessons she said: “This growth is not that sustainable. I can give you some European examples, Spain in 2008 was the market leader in terms of installed capacity. Once the target is reached, the market can be closed down. That’s what happened in Spain. Its market skyrocketed in the large-scale segment with average system sizes of 8MW and all of a sudden the government decided to stop it killed the market.”

The key to stabilizing markets would be smaller scale deployment, she said. “The residential and commercial rooftop segment however, is vital for sustainable market development. And this is something you can see in markets such Germany and Italy.”

Colorado had also succeeded in balancing its market too, she said. “Colorado has developed all segments – the residential segment and commercial segment, small and large-scale.

“But if you look at a less mature market in New Mexico there is huge growth in large scale segment.

“However, there is risk involved with large-scale only because smaller scale residential and commercial are considered to be more sustainable.”

She acknowledged that Europe faced pressing challenges over market stabilization now that FITs were winding down in Germany and other countries. But FITs still represent a proven stage in market development, but PV would become more of an energy generation proposition rather and an investment opportunity.

“Let’s face it we’re moving to a time when the feed in tariffs are slowing fading out. Where new market drivers come to the fore, self-consumption, energy production – not so much an investment case and that comes with much more market drivers that will impact the industry.

“There are a lot of question marks over what will happen in the next phase of PV meaning energy generation…”

Italy was still a growth area for FIT-driven projects, she said, despite fears the government was going to scale back quickly on its massively successful Conto Energia.

“Italy had a good last year in 2010. A lot of installed capacity - 2.5GW that will be connected this year plus they amended the Conto Energia. It came out a lot better than expected. So the limitation for the FIT is up to 1MW rooftop systems.

“That’s really good because it helps to address commercial segment – so the prospects for Italy are great. Natural conditions are great. FITs are still great so we still do see a good installed capacity in 2011. And also in 2012.”

Part of this growth was thanks to Italy cutting back on redtape – regulatory streamlining would be an easy improvement for something that the US which also needed to create more market certainty.

“Before there was a problem with the approval process, bureaucratic issues that hindered the market growth. In the US this is really a big, big problem. There are problems around financing and how stable is the framework?

Honestly, the FIT is the very important tool that totally fostered the market development in Europe. Regardless of the framework systems in the US which may absolutely work, it is important to provide security of a stable programme.

“In Europe, the PV market is moving toward commercial and residential as sustainable segments. Markets are so fragile and volatile because they depend on framework conditions in both Europe and the US.”

At his conference in LA this week, Brown railed against barriers to deployment of renewables such as permitting and public participation in democracy:

“There’s two regulatory hurdles - just getting a permit that could take a cookie cutter ordinance. Some 400 cities that could issue these permits which invite community participation. When you have 38m people [living in California] there is always going to be someone who says no.”

“Our system of participation means that any old fool can object to anything. But restricting participation has the feel of being undemocratic but you invite everyone no matter how benighted you wouldn’t get anything done.”

“[There is] a lot of distributed political power - we need base of arbitrary power to get over that.”

He vowed to make the regulatory authorities such as the California Public Utilities Commission, the California Independent Operator System and the California Energy Commission, work together to overcome problems such as complex and expensive permitting processes which varied in the state.

In San Jose a permit for domestic installation can be done over the counter, whereas the process was a lot longer and costlier in LA, Solar City pointed out during a panel discussion.

Brown said that the EU and China were leading on clean energy because its executive leadership were allowed “greater latitude” to execute and implement policies. 

“If you are in Germany or China there are more eyes on the prize because those countries allow executive leadership more latitude. So many people in California can block things.

“Someone has to think long term and someone has the authority to execute that doesn’t please the immediate news cycle.

“The challenge is -  can anyone anywhere in the public sector make a long term decision and make it stick?”

But I wonder if Brown has yet grasped the nettle: making any target stick, such as his ambitious 12GW goal, may well require new legislation… but that will take time.

Incentives through the CPUC may achieve quicker results… but can Brown convince the commission and utilities to make a common sense decision on FITs?

California wins SunShot dollars while GOP trains sights on clean energy

Californian companies did exceptionally well out of Steven Chu’s “SunShot” announcement on Friday to award $27m to nine companies in the US to drive down the cost of solar. And as Vice President Joe Biden announces $53bn for high speed rail today, it looks like Barack Obama is following through with his clean energy commitments made in his "Sputnik" state of the union.

The US energy secretary announced details of the Department of Energy's SunShot initiative to reduce the cost of photovoltaic solar energy systems by about 75% by 2020, to $1 a watt.

SunShot will focus on four areas:

• Technologies for solar cells and arrays that convert sunlight to energy;
• Electronics that optimize the performance of the installation;
• Improvements in the efficiency of solar manufacturing processes;
• Installation, design and permitting for solar energy systems.