EU places import tariffs on Chinese solar modules

The EU has put import tariffs on future solar products coming from China. The tariff is to start on June 6th of this year. This will be the largest anti-subsidy proceedings the EU has ever undertaken. Until June 5th, Member States of the EU can still give their opinions to the Commission, however, they will be unable to prevent the import tariffs. Some experts are concerned that these tariffs could trigger a trade war between Europe and China.

China is currently the largest photovoltaic product manufacturer in the world and has grown significantly in recent years. Their products are demanded by the industry all over the world. Last year alone, China sold 21 billion Euros of solar products and related components in Europe. European manufacturers have found it difficult to compete with the cheap prices of the Chinese manufacturers. Some European solar companies have filed for bankruptcy including Solon, Centrotherm, and Q-Cells. Under this large import tariff, European plant manufacturers with their primary market in China will also likely be impacted.


Cheap Low Quality Silicon turned into the Highest Quality Silicon

At the University of New South Wales (UNSW) in Australia, researchers have managed to greatly increase the efficiency of solar cells while simultaneously reducing its costs. These improvements were not expected within the industry for at least another ten years and includes new technology.

Using low quality silicon wafers can decrease the price of solar panels©Fernando Alonso Herrero

Using low quality silicon wafers can decrease the price of solar panels©Fernando Alonso Herrero

Researchers at UNSW have figured out a method to control the charge state of hydrogen atoms to correct deficiencies within silicon. Professor Stuart Wenham, the head of the university’s photovoltaics centre of excellence said, “We’ve been able to figure out what the secret is that enables hydrogen to sometimes work the way people want it to, and sometimes doesn’t.” Essentially, it allows poor quality silicon wafers to behave like high quality wafers which reduces the costs of solar panels. Currently, the silicon wafer alone accounts for over 50% of the costs required to make a solar cell. This leads to the industry tendency to focus on finding ways to lower the cost of silicon but often instigates a higher number of defects and contaminants that lower its efficiency. However, with this new technology, cheaper silicon is more efficient than using even the highest quality silicon. Using lower quality silicon wafers in this case could be an effective way to lower solar cell prices.

The new technology would allow for solar cell efficiencies between 21-23% , much greater than the 17-19% efficiency of the cells on the current market. The UNSW has patented their technique of controlling hydrogen atoms. Nevertheless, prices for solar panels have fallen by approximately 65% in the last two years, partially due to the huge increase in solar panel production in China. The falling prices have also lead to an increase in the Australian solar market with over 1 million homes with solar photovoltaic energy installed. The industry is also interested in UNSW’s new technology. They are working with industry partners to commercialise the project and with manufacturing companies to implement these new capabilities. The Australian Renewable Energy Agency is supporting the project and is expected to be complete in 2016.

Source: Computer World

Penalty tariffs on Chinese solar modules likely from 6th of June

According to Reuters news agency, the EU Trade Commissioner is being advised to impose penalty customs duties on solar modules from China. This protectionist advance has the potential aggravate the Chinese administration in Peking.

China Europe Solar module tariffs

Penalty customs for Europe? The EU Trade Commission will be making a decision soon.©scibak

The actual circumstances are already a delicate topic in Brussels. On the one hand Europe is concerned about the protection of its own manufacturers such as SolarWorld from cheap imports, but on the other hand China is the second largest trade partner and important in helping the Union out of its recession.

Karel de Gucht is expected to propose an increase of duties this Wednesday, in order to protect the EU from Chinese production, which quadrupled between 2009 and 2011, surpassing global demand.

According to EU manufacturers more than 80 percent of the European markets are controlled by Chinese business interests. A few years earlier Chinese market-share was only slightly more than zero, a likely cause of the European Trade Commission’s action now. According to HIS, last year Europe comprised approximately 50 percent of the worldwide solar market with a total value of 77 billion $.

For de Gucht it is clear that dumping is occurring in the EU market. It is perceived to be very likely that his recommendations will be followed and that penalty duties will be imposed starting the 6th of June.

Experts and diplomats predict tariffs to begin at 30%, which would make exportation much less attractive for China. Currently, Chinese modules are on average 45 percent cheaper than those produced in Europe.

The EU Commission declined to comment.

Source: Reuters

Guest Article: How to Tune Your German Green Energy Asset Without Getting Sun Burnt in the Attempt

How can the returns on green energy assets be amplified without refinancing? What can be done to eliminate those “love handles” on wind or solar parks? For some readers, what follows will probably be a review of the basics of managing a renewable energy asset in general, however, I will highlight a few focus areas  that can generate further value, considering nuances of the German renewable energy regime (Erneuerbare Energien Gesetz – EEG). Perhaps as a backdrop, I have been focusing on the photovoltaic (PV) business (particularly large parks), yet, the EEG itself covers a much broader spectrum of technologies from hydropower and different types of biogases, to biomass, geothermal as well as wind (onshore, offshore, repowering), the tactics below, a priori, being applicable to all of them.

Martin Supancic writing about how to Tune Your German Green Energy Asset Without Getting Sun Burnt in the Attempt

German renewable energy assets are quite appealing due to the stable regulatory framework, although costs are mounting for German households. As a consequence, the pressure is growing for painful political decisions to be taken in order to curb this phenomenon. The surge of German renewable investments over the past few years has led to a gradual adjustment of the corresponding Feed-in-Tariffs (FiTs) in an attempt to disincentivise the amount of newly built capacity, especially in the form of large ground-mounted projects going forward. Thus, investors who were lucky enough to fetch a park in recent months have had to conform themselves to ever lower returns.

Finding strategies to lift the relatively low equity IRRs (5% to 6%) is challenging but not impossible. Buyers of PV parks prior to Jan. 2012 will probably find it easier to uncover hidden value – during the heydays of investment frenzy, project developers, EPCs and O&M contractors could easily turn a quick buck while dictating the transaction terms. Demand was gleaming hot and projects quickly sold in competitive bidding processes, even before being completed, to ensure the highest possible FiTs. As the tariffs dropped, all stakeholders adjusted to the circumstances: PV module prices fell substantially (e.g. global glut, new manufacturing capacity being added in China…), EPC and O&M costs came down to permit attractive prices perMWp, while project developers reined in their margins. As a result, both project costs (EUR/MWp) and O&M prices are quite different today compared to those two or more years ago, opening the door to optimisation potentials.

When we examine options allowing investors to extract further value from their existing assets, we can differentiate between pure financial (e.g. refinancing) and operational measures – I will focus on the latter. The typical “P&L” of a PV park is a good starting point:

– Sales
– Maintenance
– Insurance
– Miscellaneous Expenses: Accounting, Electricity…

Sales: Since the first of January2012 the revised EEG 2012 offers under §33b the opportunity to directly market renewable energy via the so-called “Market Bonus Scheme”, a limited-time opportunity. Provided the park is equipped with remote control devices, allowing it to be decoupled from the grid (e.g. negative market prices), the owners may earn two small margins (total approximately 1.4-1.7%) on top of the FiTs. Sounds like peanuts but for parks upwards of 20 MW, this can easily mean some EUR +100,000 over 18 months.

Maintenance: This is a more complex issue, where risk, covered/non-covered expenses and legal contracts must careful be considered. The result will depend on the existing supplieragreements, options to premature rescissions, and particularly bank consent, assuming the assets are debt financed. Its weight in overall operating costs is significant, thus, even a 1 or 2 EUR/kWp reduction positively impacts the recurring cash flow.

Insurance: As a percentage of operating costs, this is a relatively small item but it too, can be optimized, although absolute savings will be more limited.

Miscellaneous Expenses: This is a bit of a rag bag, with limited potential for a “hair cut”.

Stay tuned as subsequent blog posts shed additional light on the revenue-enhancing and cost cutting potential available to German green asset owners. Looking forward to your comments and particularly for your experiences in executing the mentioned optimization measures.

About the Author

Martin Supancic (37) is external financial advisor to Sojitz Europe plc, the European operations of Japanese trading company Sojitz Corp., with offices on all continents and in major European business capitals. He analyzes photovoltaic investments in Europe and Latin America, and has closed transactions worth 27 MW (more than EUR 65 mill.). In addition, he scouts for innovative cleantech start-ups, helping them grow their sales and arrange venture capital financing. Prior to advising Sojitz Europe plc, Martin advised companies in their internationalization efforts, headed international corporate development at now defunct Spanish biodiesel start-up Green Fuel Corporacion, SA, (shareholders included Endesa, Tecnicas Reunidas, Grupo TSK) and worked on multi sector deals, incl. wind and solar parks, at Deloitte Corporate Finance/Transaction Advisory Services in Madrid, Spain.

Interview with Cofounder of Canadian Clean Energy Conferences Andrew Slavin

In 2009, Canadian Clean Energy Conferences was established in order to support the development of the Canadian renewable energy industry. It is a Quebec-based company that organizes renewable energy and climate events across Canada. Through business-to-business conferences, CEO think tanks, and training workshops, Canadian Clean promotes the advancement of renewable energies in efforts to mitigate anthropogenic climate change.

One of their recent and most prominent events includes the annual Ontario Feed-in-Tariff Forum that took place 3-4 April 2013. This event has previously attracted over 1200 attendees from around the world. It focuses on the opportunities provided by Ontario’s Feed-in-Tariff program for the renewable energy sector.

Milk the Sun is interviewing Andrew Slavin, the co-founder and director of Canadian Clean for stimulating opinions on moving towards renewable energy and a low-carbon economy

Canada PV Solar, Andrew Slavin

Andrew Slavin

Milk the Sun: Mr. Slavin, what are the main goals and achievements of Canadian Clean Energy Conferences and its events?

Slavin:  Our aim is to provide innovative and stimulating events that support the development of renewable energy projects across Canada. We are very proud of our “headline” event which is the Ontario Feed-In Tariff Forum. It is regarded by industry as the spring renewable energy event in Canada. We try to host our events like we are hosting an event at our house.  Though now quite big, we try to make this conference intimate, personable and an opportunity to meet all the right people in an informal but professional manner.

Milk the Sun: How has Ontario’s FIT program propelled Ontario in the renewable energy market? How is renewable energy progressing in other provinces?

Slavin: The Ontario FIT program has transformed the energy sector in Ontario (and arguably across Canada). The aim of the scheme was to enable the province (Ontario) to close its coal-fired power stations, create jobs and create a renewable energy industry in Ontario.  All of this has been achieved in a relatively short period of time. The program has not been without its teething troubles. The FIT was massively oversubscribed, swamping the administrators and creating delays. There has been some negative sentiment in rural communities who object to the rapid growth of wind farms. There has been friction between renewable energy developers and the incumbent utilities regarding connecting projects. Lastly, and perhaps most significantly, the FIT scheme has become a political issue with the scheme proponents, the Liberal Government, coming under pressure from the main Conservative opposition who claim the scheme is expensive and cumbersome.

Milk the Sun: How has Canada progressed in the renewable energy sector in comparison to other countries? What has made it competitive and how could it be improved?

Slavin: The Canadian energy market is complex with each Province having its own energy policy and goals. Provinces such as BC and Quebec have huge hydro power resources providing up to 90% of the energy needs from renewable sources. Ontario and Nova Scotia on the other hand have traditionally relied on coal or nuclear and hence have been more innovative when it comes to supporting renewable energy projects. The Ontario FIT scheme was seen as a way to both stimulate the economy and shift the power mix towards more renewable sources of energy. The scheme has energized the renewable energy sector across Canada making it more competitive in policy and financial terms. This competitiveness will increase once the real cost of carbon is included in energy pricing.

Milk the Sun: What do you expect to see in Canada’s future policies regarding the renewable energy sector?

Slavin: In the next few years all the provincial governments will mandate the procurement of more renewable energy. Even oil rich Alberta recognizes the benefits of supporting alternative energy sources.  Canada has huge potential in both traditional and renewable resources and has the opportunity to be a real leader in sustainable and balanced resource development. The federal government has committed to matching the US when it comes to carbon and climate change policies but in the meantime is taking a sector-based approach to climate policy in an attempt to clean up the most polluting industries. These actions, at all levels of government, are creating exciting opportunities for the Canadian renewable energy industry.

Milk the Sun: What are some of the issues Canada may have to overcome to reach a low-carbon economy?

Slavin: Just politics! The potential is there and huge it just requires politicians with the foresight to look beyond the next ballot.

Milk the Sun would like to thank Mr. Slavin for the interview.


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