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PV in Latin America comes into focus for Milk the Sun

Berlin, 03.09.2013 Milk the Sun is launching a Spanish-language version of its online marketplace following the growing requirement from the international PV market to be present in the rapidly expanding markets of Latin America.

Milk the Sun, the international online marketplace for photovoltaic systems, project rights and undeveloped areas is now available in Spanish. This move was taken in order to meet the requirements of the Latin American market as this market continues on its rapid development. Buoyed by the continuing business success of the German, Italian, English and French language versions, the 2012 launched MilktheSun.com now adds www.milkthesun.com/esp to its portfolio of online portals.

Milk the Sun, the international online marketplace for photovoltaic systems, project rights and undeveloped areas is now available in Spanish.

Milk the Sun, the international online marketplace for photovoltaic systems, project rights and undeveloped areas is now available in Spanish.

Latin America will add to Milk the Sun’s core European markets, while joining North America and Japan in the companies’ move to become a truly global market place for solar PV. Alba Miró, Country Manager Spain and Latin America states that: “We currently provide a variety of photovoltaic projects in Latin America, including in countries such as Chile, Ecuador and Costa Rica, with new project inquiries being  constantly added to our portal. Comparatively, on the old continent, things do not look quite as up-beat: The number of Spanish projects on our platform is currently being revised by the provider to represent the current price and regulatory situation. Even so, the launch of a Spanish-language version of our portal is a response to the rapid development of the Central and South American markets for solar energy. “

The numbers prove Milk the Sun right: the construction of new solar systems in Latin America for this year is an estimated 450 megawatts, when compared to the previous year this is an increase of almost 400 percent. By 2017, a further increase of 13 gigawatts of photovoltaic capacity is expected in Latin American countries. In Spain itself, even if the regulatory situation is currently characterized by market caution and uncertainty, there exists significant potential for those experienced investors in the medium term. Spain remains one of the larger European producers with nearly 4 percent of the energy mix generated by photovoltaic systems in the country.

“In the Spanish-speaking world there exists huge potential for the photovoltaic industry. The market is favoured by the now low system costs, extremely high levels of sunlight, and the often high electricity price. The market is also assisted by a steadily growing demand for energy, this allows for Latin American countries to become rapidly growing PV markets.

 

How to buy operational solar installations through Milk the Sun

Milk the Sun offers numerous operational PV plants through its online marketplace at www.milkthesun.com . These installations can be isolated via the search mask.

Guest Article: Are You Overpaying for Solar Energy Operations and Maintenance Services?

To date, I have focused on the revenue management of a German renewable energy asset. Today, I am switching to the money-grinding cost side. A unique feature of photovoltaic (PV) investments is that their costs are rather predictable; revenue estimates are also less susceptible to wild swings versus, for example, a retailer or a manufacturer who do not benefit from offtake contracts. Investors must demonstrate to the project financier that debt can be serviced while meeting the internal return targets.

Operations & Maintenance costs are essential for finding finance for renewable and solar energy projects.

Operations & Maintenance costs are essential for finding finance for renewable and solar energy projects.

A typical PV park, regardless of whether built in Germany or elsewhere in the world, has a fairly uniform operating cost structure comprising:

– Operations & Maintenance (O&M) Services
– Land lease (if not purchased)
– Insurance
– Accounting
– Legal
– Other Expenses (electricity consumption of monitoring systems…)

The most important cost item by far is O&M services, an integral part of any project finance facility. If you don’t have these in place, either you need to provide certain guarantees to the bank or your project will most likely not be financed. The comprehensiveness varies immensely depending on the expenses and risks covered, emulating an insurance policy, ranging from minimal coverage to the premium all-inclusive package (sounds like going on vacation). Some contracts are quite limited and will only cover costs up to a few thousand Euros, others are customized and will comprise differing degrees of reaction times, spare parts, as well as inverter repair services. As with other multi-year projects, the ready supply of spare parts 15 or 20 years down the road is difficult to predict, particularly in a fast-moving, roller-coaster sector such as the PV industry, where once global reference companies have disappeared or are suffering serious financial distress. Thus, many investors and their financing banks insist on reputable, bankable, financially stable heavyweights, although this does not avoid surprises. Who would have foreseen the demise of Conergy, Q-cells, Suntech, Gehrlicher, Isofoton and Co. 10 years ago?

In the solar heydays on the back of serious buyer competition, time was of the essence. If you did not connect your park within a planned time frame, you risked foregoing a significant margin (would anyone’s strategy have changed if retroactive measures were anticipated?). This led to O&M contracts being signed without seriously questioning the service level. Developers would pressure buyers stating there was no time for lengthy negotiations, either they signed or lost out on the deal. Presently, the European PV industry is at a crossroads: what geographic areas and business segments should the diehards focus on? Due to evaporating PV construction activity in Europe, uncertain regulatory regimes (e.g. Spain, India…), significantly lower margins, the remaining EPCs and O&M suppliers are fighting for survival bidding down the cost of their services. This is hurting margins (asset owners are clicking their heels) and may actually accelerate the excess-capacity purging process. When selecting a new supplier, be sure to study their financial muscle, recent earnings and screen the news for potentially negative incidents.

If your O&M contract dates from 2011 or earlier, requesting the remaining, financially sound O&M companies for service proposals is a good first step (Milk The Sun also circulates your request for proposals). Due to the complex nature of the legal agreements, forwarding a copy of the current O&M contract would probably simplify the process by saving analysis time. New O&M service proposals, guaranteeing the same operations and maintenance conditions, can offer considerable savings – the older your O&M contract, the greater the probability of overpaying per kWp of installed capacity. Contracts signed in 2011 can save anywhere between 1 to 7 EUR/kWp/year, depending on what is acceptable to the investor and the bank – the higher the savings, the greater the risk, either because the service package is reduced to a minimum (asset owner will have to bear incidental cost risk) or because the company is desperately seeking new business. Provided the asset owner, bank and new supplier reach an agreement, the current O&M contract needs to be prematurely rescinded. Seeking legal advice on “how to” will be useful. At times, it may not even be necessary to switch your provider given the market situation, the risk of losing business is a surprisingly sufficiently incentivizing “carrot” to submit a more attractive offer going forwards.

Of the remaining expenses, land lease, accounting and legal costs are items that are difficult to optimize further, if at all. Accountants can be cheaper in certain parts of a country, but they also need to be reliable and experienced. Competition among insurance companies for a mature business may yield “small” savings. In a recent case, the asset owner could have saved some EUR 2,000 to EUR 3,000 per year. Simply contact an insurance broker or enlist German websites such as Milk The Sun, Verivox or Check24 as your footsoldiers. The most fat will likely be cut in the electricity consumption of the monitoring system. If extreme swings in energy consumption are noticed, a technical consultant may need to evaluate the system components. Requesting energy supply bids from various utilities (via previously mentioned websites) quickly leads to an optimized cost per consumed kWh.

Now with this “food for thought”, enjoy the sun!

This is the third part of a series of guest articles written by Martin Supancic. You can find the other articles in his series here:

1. How to Tune Your German Green Energy Asset Without Getting Sun Burnt in the Attempt

2. The German Direct Marketing Framework and Potential Benefits for your Assets

3. Focusing on the German so-called “Market Bonus” Scheme

 

Solar in the City: How urban community solar projects can both improve the lives of residents and offer future investment opportunities.

As the mercury rises across the capital, London’s tower blocks and estates are basking in the summer sun. But beyond the beer and BBQ’s, Councils and Housing associations across the UK are feeling increasing pressure from central government to make their buildings and housing stock more energy efficient. This stems from dual concerns regarding both the environment and the increasing cost of energy, a cost which comes directly from already stretched local authority budgets.

Tower Blocks offer a great opportunity for inner city solar PV energy production.

Tower Blocks offer a great opportunity for inner city solar PV energy production.

In response to this, several proactive councils and community organizations are beginning to install PV solar panels in order to meet this demand and reduce bills for both councils and residents. Under the governments Green Deal scheme, the Edward Woods estate in Hammersmith, West London received £16m in grants to upgrade its energy efficiency, this included installing a PV solar array on the roofs of the blocks to provide electricity to residents. This scheme has so far proved helpful in reducing bills for a largely deprived community, where a large proportion of residents would be described as in ‘fuel poverty’.

 A scheme across the city in Brixton is developing community funded solar PV installations that do not rely on council money or government grants, but instead rely on private investment from both the estate’s residents and external investors. Its mission is to create ‘cooperatively owned renewable energy projects’ that benefit the community, bring down the peoples carbon footprint and substantially reduce energy bills. Run as a not for profit ‘Brixton Energy’ already has three sites across the area and is seeking investment to expand further. As a community project Brixton Energy seeks to benefit from the governments reformed FIT rates, these give higher rates to community owned energy projects that produce over 10 Megawatts of power. Investors also benefit from the governments Seed Enterprise Investment Scheme (SEIS) which gives a 50% tax break to those investing in the scheme. This helps to encourage small scale investment in innovative community run projects.

 Although returns on these types of investments are small (estimated at 4%), harnessing private equity for these projects is crucial, and with the government’s continued support, these projects can benefit the communities involved and yield returns for investors. These schemes, both council and privately lead, also reduce the burden on peoples and the councils pocket by sourcing organised housing units’ power needs from renewable and sustainable technology. Although problems with this approach have been identified. An  article produced by the BBC states that ‘Shares (in community solar projects) may be difficult to sell, as there is no real marketplace to do so.’

 Source:BBC News, London School of Economics, Brixton Energy

 

Interview with UK’s Green Party Jason Kitcat

In May 2011, Jason Kitcat was elected member of UK’s first Green party led council administration. He represents the Regency Ward in central Brighton. Before being elected to Leader of Council, Kitcat was Cabinet Member for Finance & Central Services. He has been a Green city councilor for six years and a Green candidate for European Parliament in 2009. He is known for leading successful campaigns including his own by-election and the 2009 European Elections. His special interests include technology, politics, and the environment.

Milk the Sun is interviewing Jason Kitcat, Leader of Brighton & Hove City Council.

Jason Kitcat from UK

Jason Kitcat from UK

Milk the Sun: What are the Green Party goals for implementing renewable energy in the UK and how will you try to achieve these?

Kitcat: We already know that green industries are creating more jobs than any other part of the economy. So we believe that investing in renewable energy, in all its forms, would benefit the environment and create much needed jobs. We believe that instead of subsidising nuclear power and a dash for gas, government should be properly incentivising energy efficiency, new renewables plus retrofitting homes and offices.

Milk the Sun: How has the decrease in Renewable Energy Feed-in Tariffs (FiTs) impacted investment into renewable sources?

Kitcat: In Brighton & Hove the FiTs cuts had a significant impact on the council’s ability to move to a wide-scale roll out of solar panels. The uncertainty over government policy also made it incredibly difficult for the many solar businesses in this area to keep developing and attracting customers. Fortunately solar panel prices have kept falling so the business case for installing them is often still viable. As a council we are rolling out panels as best we can, but the finances aren’t as attractive as they were.

Milk the Sun: There are several community energy projects in Brighton such as the Brighton Energy Co-operative and the Brighton & Hove Energy Services that is making it easier for communities to get involved in renewables. How do energy projects such as these benefit the community and the individuals? Will there more projects coming up soon?

Kitcat: I think they are a fantastic example of the more democratic nature of renewable energy technologies. Communities can take local ownership and responsibility for energy generation, and reducing their carbon footprint. It’s also brilliant for children to see and understand what the renewable future can be like with panels and wind turbines going up around them.

The move to smaller scale local renewables isn’t just about devolving power (in all its meanings) but it is also an economic shift, like that from analogue to digital. We have exciting new co-operative and social business ideas like the ones you mentioned coming forward. They can viably compete with well established ‘factory’ model energy suppliers. These new groups are from their communities and often contribute back to their localities in many ways. I think we are going to see many more of these ideas blossom as renewable technologies continue to evolve.

Milk the Sun: There have been many new developments in solar technology such as better storage capacity and new materials like organics for solar panels that are sure to improve solar energy technology.  What kinds of technological innovations do you believe are essential for the future of solar energy?

Kitcat: Reducing cost, easing installation and ensuring reliability have to be key goals for renewable technology development. Often the business cases for installing solar depend on 25 year models, so we need to have confidence that the technologies will keep delivering as promised over that period and beyond. In Brighton & Hove we are seeing lots of innovation in this area, we recently hosted the second Eco-Tech Show and Conference in the city focusing on all the great developments in the field. The 2014 show promises to offer more insights into these innovations, see http://www.ecotechnologyshow.co.uk

Milk the Sun: What do you think are the possibilities and benefits that will come with initiatives in Europe and the North African deserts like Desertec and EU-MENA supergrids to provide renewable energy to the world?

Kitcat: Personally I’d prefer to focus on smaller scale, decentralised and local energy solutions. I’m yet to be convinced that these super-scale projects are the answer. There is also a risk that such projects could be exploitative and won’t actually meaningfully benefit the local communities in which they are being placed.

Milk the Sun: Solar energy is especially popular in Southern UK, will you expect to see that popularity extend to the rest of the UK? How are renewable energies perceived in the UK?

Kitcat: Technology always needs to be applied appropriately, and the same is true for renewables. There is no point putting up solar panels if they aren’t going to return a reasonable amount of energy. I certainly wouldn’t characterise renewables as being focused only on the South. Yes there might be more sun for solar down south, but there are viable spots for wind, solar and tidal across the UK. Ultimately we need to challenge the NIMBY (not in my back yard) attitude to installing renewables. A well insulated, energy efficient home is going to be more comfortable and cheaper to run. To me that should be an easy argument to make to those yet to be convinced.

Milk the Sun: What should the UK expect to see in regards to renewable energy in the next decade?

Kitcat: What I’d like to see is a far more significant switch to renewable energy and a radical programme of energy efficiency retrofitting. However I fear that the state of the current big three parties in central government means much of the drive and funding that could deliver these is being diverted elsewhere to things like new nuclear and gas exploration. That’s extremely disappointing but we shouldn’t give up the fight to change minds in government.

Milk the Sun would like to thank Mr. Kitcat for his interview. You can find out more about Jason Kitcat on his personal website and blog.

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