Financing PV technology
Eleni Despotou/Pieterjan VanbuggenhoutEuropean Phtotovoltaic Industry Association
Brussels, 20 June 2011
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Market evolution – different scenarios until 2020
36 GW/y - 12 %
17 GW/y - 6 %
10 GW/y - 4 %
2.4 %
1.15 %
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The real generation cost of photovoltaic electricity:• Capital expenditure (€)• Operation & Maintenance (€)• Total Production (kWh)
Levelised Cost of Electricity (LCOE): €/kWh
What about the cost?
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LCOE [€nominal/kWh]0.40
0.35
0.30
0.25
0.20
0.15
0.10
0.05
0.002020
0.19
0.08
2019
0.19
0.08
2018
0.20
0.08
2017
0.21
0.09
2016
0.22
0.09
2015
0.24
0.10
2014
0.25
0.16
0.11
2013
0.27
0.12
2012
0.29
0.13
2011
0.32
0.14
2010
0.36
The generation cost of PV in Europe is expected to decline by around 50% until 2020
European PV LCOE range projection 2010 – 2020
Source: EPIA/ A.T. Kearney / Phoenix Solar LCOE model; various input sources
Band of LCOE reflects:• Four different system
size segments• Crystalline Silicon and
Thin Film technologies• Differences in national
installed system and operations cost
• Differences in national irradiation
• Different WACC for different countries considered
• VAT for residential segment
Thanks to Phoenix Solar for granting permission to EPIA to use existing cost model !
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Goal of the Solar Europe Industry Initiative
Source: EPIA and EU PVTP, SEII Implementation Plan 2010-2012
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Four different project types
1. Industrial technology development
2.Manufacturing facilities
3.Generation capacities
4.Solar resource forecasting and monitoring
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TYPE 1: Industrial technology development
What is it?• pilot-line demonstration• equipment and product standardisation • building-integrated photovoltaics (BIPV)• novel technologies• technical concepts for very high levels of grid penetration• printed photovoltaics• novel applications of nanotechnology for enhanced performance• “PV/smart-grid units”
Financial details• 100% equity or grants • 5-50 M€ per project• payment upfront, exit in 5-7 years
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TYPE 1: Industrial technology development
Typical issues• Difficulty for start-ups to raise capital• Technology development risk
How to tackle this?• Joint private/public R&D programs• Grants• ARPA-E program in the USA (see http://www.arpa-e.energy.gov):
financing dependent on proven ability to attract private capital for next phase
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TYPE 2: Manufacturing facilities
What is it?• new manufacturing facilities• strong impact on the economics of solar PV • strategic relevance for the presence and competitiveness of the European
manufacturing industry
Financial details• Corporate Finance: Equity/Debt ratio - 20/80 or higher• 50 to 250 M€• 10 to 15 years typically
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TYPE 2: Manufacturing facilities
Typical issues• Availability of debt • High cost of capital• Price pressure, reduced margins and missed sales targets. In the worst case
scenarios losses could amount to values in the order of 90% of the asset.
How to tackle this?• Soft or competitive loans• Loan guarantees• Other forms of securitisation
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TYPE 3: Generation capacities
What is it?• for technologies ready for commercialisation but with little or no field track
record, for which the perceived financial risk is still high• portfolio-of-installations approach to realise more installations in different
locations
FINANCIAL DETAILS• Project Finance: Equity/Debt - 30/70 or higher• 10 up to 120 M€• 20 years typically
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TYPE 3: Generation capacities
Typical issues• Debt for technologies which are considered not ‘bankable’ is either too
expensive or not available• Returns for equity investors on these projects are likely to be uneconomical
due to lower leverage• Technology risk: lower performance ratio than expected in the budget,
consequently lower energy, hence cash, generated by the project (worst-case losses are expected to be less than 30%)
How to tackle this?• Different financial solutions, such as soft loans or loan guarantees• Most banks would accept a 1-2 year successful operation as a sufficient
track record• Revolving facilities in order to make the financing instruments as effective
as possible
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TYPE 4: Solar resource forecasting and monitoring
What is it?• solar resource evaluation (also by means of real-time satellite data)• solar irradiation prediction models • statistical methods for PV plant behaviour prediction exploiting also artificial
intelligence (AI) techniques• fault detection techniques based on both deterministic plant modelling and
AI
FINANCIAL DETAILS• Corporate Finance + EU grants: Joint private/public partnership. EU Grants
50-70% of the investment costs should be expected.• 10 to 25 M€• typically 3-5 years
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TYPE 4: Solar resource forecasting and monitoring
Typical issues• Competition with open source similar products• What is the real interest to pay for these services? related to the
respective regulatory environment
How to tackle this?• Joint private/public partnership• EU grants of 50-70% of the investment costs
www.epia.orgCredits pictures:BP Solar, Concentrix, First Solar,
Isofoton ,Photowatt, Siliken
Text: -Guido Agostinelli (GoodEnergies)-Fabrizio Bonemazzi (Enel Green Power)-Wim Sinke (EU PVTP)-Pieterjan Vanbuggenhout (EPIA)
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The underlying installed system prices could go down by 40% in the coming decade
Projection of European installed PV system reference price range1)
(2010 to 2020; weighted technology mix per segment)
Installed system prices
[€nominal/Wp]
2020
1.30
2.08
1.34
2.16
2018
1.40
2.24
2017 2019
1.46
2.34
2016
1.521.70
2.70
2013 2015
2.44
1.81
2.84
2012
1.931.60
2011
2.07
3.18
2010
2.26
3.41
2.56
2014
3.00
1) Range across segments and PV technologies (c-Si and thin-film); includes harmonized, competitive standard margins for modules, BOS and installations; incl. administrative cost; VAT excluded
Source: EPIA/ A.T. Kearney LCOE model; various input sources
∆: - €/W 0.96 to- €/W 1.33
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R&D across the entire PV value chain
Other BoSOther BoSInverterInverterModuleModule
Silicon / Silane
Silicon / Silane
Cell Cell WaferWaferPV Manu-facturing
Technology production
PV Manu-facturing
Technology production
PV system production
Decom-missioning& repower-
ing
Decom-missioning& repower-
ing
Power salesand VA services
Power salesand VA services
Operation & Mainte-nance
Operation & Mainte-nance
EPC / Installation
EPC / Installation
Site & Project
develop-ment
Site & Project
develop-ment
Project financeProject finance
PV project development and operation
• Thin film module• Thin film module
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