Spain’s Solar Bubble Looks Ready to Pop. The Market Will Be Just Fine

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The Spanish solar market is red-hot. It’s hard to think of any solar market generating so much interest in the absence of a generous subsidy package.

The bulk of this speculation is built on the hope of securing a power-purchase agreement (PPA) for a chunk of a project’s capacity and selling the rest on the market. Great insolation and an ambitious renewable energy target (still currently in draft form) have drawn developer interest from across Europe at a time when former solar darlings Germany and the U.K. have slowed.

Wood Mackenzie expects around 4 gigawatts to be installed in Spain this year, with the overwhelming majority of that stemming from a 2017 auction. Beyond this year, the research firm is tracking a late-stage pipeline of 8.6 gigawatts and an even larger band of early-stage projects.

Inevitably, the bloated pipeline dwarfs the anticipated demand for PPAs. Talk of an emerging bubble has been simmering away in the background for a while.

The imagery of a bubble bursting doesn’t do justice to the untold economic, and very real human, costs often associated with such events. For example, within one year of the changes the U.K. made to its solar support regime in 2015, more than 12,500 people had lost their jobs. Disregarding projects that already had approvals in place, deployments in that region have remained pretty much stagnant.

Before that, Spain itself had set the bar on bursting solar bubbles very high with the “sun tax” and retroactive cuts to support. The government had taken out advertisements in newspapers encouraging people to cash in their pension pots to invest in solar projects. Before long, it was ending payments to these same solar projects.

Now Spain is heading toward a very different sort of bursting bubble, perhaps the first post-subsidy bubble to pop in the solar sector. Fortunately, the impact will be nowhere near as severe as the crutch being kicked away from a subsidy-based market.

“Massive speculation”

With a limited supply of PPAs, it’s a solar power buyer’s market right now in Spain, with the contracted prices offering heavy discounts compared to the current wholesale prices. If PPA offtakers, and investors, have their pick of projects, it follows that the cream will rise to the top and less capable developers and suboptimal projects will fall by the wayside.

“There is massive speculation in Spain. It’s creating a bubble,” said Conor McGuigan, director of business development for Europe at the developer Lightsource BP. The company has been in Spain for around a year and in October announced it had acquired a late-stage portfolio amounting to 300 megawatts from Forestalia.

McGuigan praises the quality of those projects, adding that having just shopped around, there are not as many ready-to-build projects as people think. He expects a lot of lower-quality projects to fade out early in the process, with common sense prevailing.

McGuigan points out that Spain is not new to solar, having already built out several gigawatts of capacity. That gives the market the tools to home in on the best projects.

“There’s going to be a lot of attrition. It’s a mature market for solar. The banks are comfortable with it; the investors are comfortable with it. The only downside is that there is not a firm government policy,” said McGuigan.

The auction process is considered overcomplicated, and plans for an overhaul remain in draft form only. Political uncertainty looms large.

Back in the unsupported solar realm, Lightsource BP has just started the process of negotiating PPAs for the Forestalia projects. McGuigan is open to mixing these with a significant merchant component; he floats a 70:30 ratio in favor of the PPAs as a ballpark figure.

The company’s PPA team will determine the best route forward on a project-by-project basis, and even then the best option could fluctuate during a project’s development timeline.

“Two-tier market”

Spain’s grid authorities have not been shy about taking action to hone the field of solar speculators. Regulators have trimmed more than 20 gigawatts of PV projects from the grid connection queue and quadrupled the guarantees required to open an application to €40,000 ($44,440) per megawatt.

Andrea Grotzke is the global head of energy solutions at BayWa r.e., the German developer behind the 175-megawatt subsidy-free Don Rodrigo project in Spain, considered to be the first substantial unsupported project in Europe.

Having already secured 225 megawatts of PPAs with Statkraft, Grotzke is bullish about her firm’s prospects of securing more such deals and is open to adding an element of merchant risk if need be.

“Grid connection is more of a crucial issue,” she said before echoing McGuigan’s expectation of very high attrition in that pipeline.

“If you look at Chile and Australia in the past, both had huge pipelines but only a limited number of projects reached the notice-to-proceed phase,” she said.

Both Lightsource BP and BayWa r.e. are remarkably bullish about a market being linked to a bubble.

Tom Heggarty, senior analyst at Wood Mackenzie Power & Renewables, said he expects to see a “two-tier market” in Spain.

“There will be first-mover developers that stay in business by spotting opportunities early and then flipping,” Heggarty said. “But the companies that we think will bring those projects to market, either down the PPA route or the merchant route, are the larger independent power producers: the utilities and the oil and gas players.”

“These are the sorts of companies that have trading abilities to manage some of the risks associated with going merchant and the ability to potentially absorb more equity within their financing,” he said.

While this means some consolidation in the short term, Heggarty expects Spain to emerge from any bursting bubble with an annual market on the order of 2 to 3 gigawatts. Compared to the carnage following previous solar bubbles in Europe, that’s a soft landing.

Source:: Spain’s Solar Bubble Looks Ready to Pop. The Market Will Be Just Fine


SunPower Grows Distributed Solar Pipeline, Preps for 2020 Storage Rollout

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SunPower swung to a slight and predicted loss in the third quarter of 2019, amid a yearlong restructuring that’s taken the solar manufacturer and installer out of the utility-scale solar business and into distributed solar and storage.

SunPower on Wednesday reported a net loss of $15 million on revenue of $476 million for Q3, compared to a net profit of $121.5 million on revenue of $436.3 million in the previous quarter and an $89.8 million loss on revenue of $428.3 million in the third quarter of 2018. Its fiscal year 2019 guidance predicts a net loss of $20 million to break-even earnings on revenue of $1.8 billion to $2 billion, in GAAP terms.

In an interview, CEO Tom Werner said the results are in line with the restructuring plan, launched last year, that has shifted SunPower’s focus from utility-scale solar to distributed residential and commercial solar, solar-plus-storage and solar-plus-storage-plus-services.

“I think we’re showing signs of benefiting from the restructuring we’re doing,” Werner said. “That part of the business is growing quite rapidly.”

Both the residential and commercial segments showed sequential growth in the quarter, including record bookings for PV for homes being built through partnerships with homebuilders ahead of California’s imminent solar mandate for new homes.

But SunPower, majority-owned by French oil giant Total, also put up record shipments into international distributed generation markets in the third quarter, Werner said during Wednesday’s conference call. International sales made up more than 70 percent of total volume, with strong growth in Europe, South Korea, Australia and Southeast Asia.

SunPower continued to ramp up production of its new Maxeon 5 solar panels and is finalizing investment to scale up further in the fourth quarter, Werner said. The company’s P-Series commercial solar panels, being made at facilities in Oregon and China, are on track for 1.3 gigawatts of shipments for the year, he added.

As for energy storage, demand for SunPower’s Helix storage systems for commercial and industrial customers remains high since last year’s introduction, with about 30 megawatts of contracts awarded and approximately 145 megawatts in the pipeline, Werner said. Attach rates for the Helix offering stand at roughly 35 percent, meaning that more than one out of every three customers are choosing to add batteries to their solar system.

Last month, SunPower started taking initial orders for its Equinox residential storage system, in advance of a national rollout late in the first quarter of 2020, Werner said. That will offer customers “more freedom from utility outages,” with modular units of storage available. Based on initial orders, SunPower is projecting 25+ percent attach rates for the Equinox storage offering, with a significantly higher rate possible in California.

This month’s unfolding power outage emergency facing Northern California customers of bankrupt utility Pacific Gas & Electric could drive an increase in demand for battery-backed solar systems, although it’s too early for data to show whether that’s actually happening.

In the longer term, California regulators have already earmarked $100 million in incentives for battery-solar systems for low-income and medically vulnerable residents of the state’s most at-risk fire zones, and they are considering further investments in grid resiliency.

SunPower’s Equinox is the latest in a growing number of integrated solar, inverter, battery and energy management packages being offered by major manufacturers and installers. But according to Werner, it’s the “only fully integrated residential storage system designed, engineered and warrantied by a single company, which we see as an important advantage.”

SunPower shed its utility-scale pipeline last year to restructure around several core areas: its manufacturing arm, known as SunPower Technologies, and its commercial and residential energy services divisions, known as SunPower Energy Services. Under a new reorganization announced Wednesday, large commercial and industrial customers will continue to be served directly, while its smaller commercial, residential and new-home-builders channels will be served through indirect channel partners.

Source:: SunPower Grows Distributed Solar Pipeline, Preps for 2020 Storage Rollout


8 Countries (Besides the US) With Solar Under $25 per Megawatt-Hour

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One of the biggest U.S. solar stories of the summer was developer 8minute’s pricing record of $19.97 per megawatt-hour for a Los Angeles project.

The project, which looks set to go ahead following initial union resistance, remains a relatively rare public example of sub-$25 per megawatt-hour pricing in the U.S. market. Elsewhere, however, developers have already been bidding under $25 for several years.

Here are eight other countries where the $25-per-megawatt-hour barrier has tumbled, as tracked by the Wood Mackenzie Power & Renewables solar analysis team.


China’s Jinko Power last year dipped under $25 per megawatt-hour with a price of $24.89 for 150 megawatts offered in Jordan’s Round III auction.

Alas, before the winner of the auction was announced, the country pulled the tender, citing the need for technical studies to confirm that the nation’s 3.6-gigawatt-capacity grid would be able to handle the impact of renewable energy plants of more than a megawatt.


The North African nation of Tunisia is soon expected to finalize the winners in a 500-megawatt tender that in July yielded five bids that were all records for the country, including one that was said to be the lowest ever seen in Africa.

The bid, from Norway’s specialist emerging markets developer Scatec Solar, came in at $24.40 per megawatt-hour. It is for a 200-megawatt project in Tataouine, a location until now best known for its role as another world in Star Wars.

United Arab Emirates

The United Arab Emirates became the first market ever to haul in solar for less than $25 per megawatt-hour when a 2016 tender yielded a price of $24.20. The bid was made by a consortium comprising the Abu Dhabi Power Corporation, China’s JinkoSolar and Japan’s Marubeni Corp.

The resulting project, Sweihan, entered operation in July and is one of the biggest solar plants in the world, with nearly 1.2 gigawatts of capacity. The Emirates Water and Electricity Company is buying the entire output of the plant under a 25-year power-purchase agreement.

In October this year, neighboring Emirate Dubai teased a price of $16.90 for the fifth phase of the Mohammed bin Rashid Al Maktoum Solar Park. The winning bidder for the 900-megawatt installation has not been revealed as of the time of writing.

Saudi Arabia

Saudi Arabia’s stop-start solar policy has overpromised and underdelivered. But in 2017, the Kingdom was able to notch a world first when developer ACWA Power won a tender for a 300-megawatt project with a then-record price of $23.42 per megawatt-hour.

The Renewable Energy Project Development Office-sponsored Sakaka solar project tender was notable because ACWA Power wasn’t even the lowest bidder. Masdar and EDF jointly tabled a rival bid of $17.86, which was ultimately rejected for reasons that remain unclear.


Saudi Arabia’s record-beating bid took place in October 2017 — but it didn’t hold the crown for long. The following month, in Chile, the Italian developer Enel came forward with a price of $21.48 per megawatt-hour for a 116-megawatt project scheduled for 2024 in Antofagasta.

The bid came as part of Chile’s third government tender for energy and marked the second time the country has broken pricing records for solar. Lawmakers lauded the fact that 100 percent of the tender went to renewable energy, with an average price of $32.50 per megawatt-hour.


The ink on Chile’s November 2017 tender outcome statement barely had time to dry before Mexico came forward with an even lower cost for solar. The French developer Neoen was not only able to undercut Enel but also became the first firm ever to bid below $20.

Neoen’s Pachamama solar plant was awarded a 15-year power-purchase agreement for electricity at just $18.93 per megawatt-hour. The ability to pick up additional revenue from clean energy certificates and merchant energy sales is likely a major factor in its pricing.


Even today, getting solar power for less than $20 per megawatt-hour is no mean feat. So new world records, such as the one set by Brazil in July this year, has analysts searching for explanations.

In the case of the 163-megawatt Brazilian Milagres project, which was awarded with a price of $16.95 per megawatt-hour, the reason seems obvious: only 30 percent of the plant’s energy will be sold at the agreed tariff, with the rest going to bidders in the free market.


No sooner had Brazil awarded the world’s cheapest solar pricing than an even lower bid appeared in Portugal. As with Milagres, analysts believe a $16.48-per-megawatt-hour bid in Portugal was only possible because a fair amount of the energy will be sold at a higher price.

“The bid prices are not reflective of the levelized cost of energy for utility-scale solar in Portugal,” said Tom Heggarty, senior analyst at Wood Mackenzie Power and Renewables. “Bidders are planning to sell into the wholesale market at the end of the 15-year contracts.”

Source:: 8 Countries (Besides the US) With Solar Under $25 per Megawatt-Hour


SoftBank to Buy 1.7 GW US Solar Portfolio From Intersect Power

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Large-scale renewables developer Intersect Power announced Thursday it will offload five solar projects it co-developed with SB Energy Global, an arm of SoftBank Group that already owns more than 5 gigawatts of wind and solar assets. The financial company subsidiary will take complete ownership of the projects, totaling 1.7 gigawatts in capacity.

The five projects are divided between two top solar markets, California and Texas, and are slated to start construction next year, with First Solar supplying modules. Austin Energy signed an offtake agreement for one of the projects, in West Texas, at 250 megawatts. The Lower Colorado River Authority will use some power from another of the Texas projects. One of the California projects will sell to Texas-based energy retailer Direct Energy Business, a subsidiary of Centrica.

Several of the projects are providing power to unnamed companies in both states. SB Energy did not immediately respond to a request for more information on the offtakers for that capacity, but Texas has become a popular market for corporate and industrial customers. Facebook and Anheuser Busch both signed significant deals in Texas in the past several months. Corporations are expected to account for at least 20 percent of the U.S. utility-scale solar market through 2024, according to Wood Mackenzie.

The significant acquisition clears out a chunk of Intersect Power’s pipeline, leaving the company with 2.9 gigawatts of projects in early or middle stages of development.

For SoftBank, the acquisition helps fulfill larger ambitions to grow a sizable renewable portfolio. According to reporting by the Wall Street Journal, those efforts have faced difficulties as their aspiration has outpaced SoftBank’s efforts to realize certain projects. The company said Thursday that it currently has assets in the United States and India, and research from WoodMac shows SB Energy ranking ninth among the top ten asset owners in the Asia-Pacific region in 2018.

At the same time, though, the most ambitious solar plans from the Japanese bank — slated for Saudi Arabia — appear to have stalled out. Last year, the government there dropped a $200 billion plan to build an eyepopping 200 gigawatts of solar and storage in partnership with the bank.

The cancellation “injected a massive amount of uncertainty” into the Saudi Arabian market according to WoodMac, though at the time the government said other solar partnerships with SoftBank would move forward. Those pledges deserve some skepticism, according to the analysts, who wrote in January that “both SoftBank and Saudi Arabia have a history of grand but empty plans.”

Source:: SoftBank to Buy 1.7 GW US Solar Portfolio From Intersect Power