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Materials: The Future of Solar PV

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Question: Solar materials are becoming volume markets. Which material segments are worth exploring for large material companies?

Haacke: We segment solar material markets into active cell materials (polysilicon), connectors (metals) and PV cell packaging (mostly polymers and glass). While the first two markets have matured comparatively quickly, those for PV cell packaging are still in the earlier stages. Active PV cells or layers will always need protection from weather and the external environment. At the same time, this packaging should allow in the maximum amount of photons for electricity production. This can be achieved with the use of polymers, coatings and glass. We estimate the total market for those cell packaging materials to reach USD 7B by 2020 – this figure includes PV front covers, encapsulants and back covers. This surely constitutes an attractive market worth exploring – even for large global corporations. Some large material companies, e.g., chemical companies, are currently entering this market or are seriously considering doing so.

Question: What has changed in recent years for solar material suppliers? Can you see similar trends to the PV module industry?

Haacke: Up until three to five years ago, the solar material value chain was largely nonintegrated. For example, glass, EVA resin, polyester and Tedlar™ film, additives and coating materials were supplied by large players, but very few of them actually sold directly to PV module manufacturers and even fewer developed an intimate knowledge of the market’s requirements. Back then, PV was still in its very early stages. Small to mid-size converter companies purchased available raw materials and tailored them to the needs of the PV end market. Leading converter companies were rewarded with very high operating margins of around 30–40%. This attracted new players to the market and led to the overcapacities and subsequent margin contractions that were witnessed between 2011 and mid-2013. Among those new entrants were, and are, large material players seeking to balance their business cycles. These large players have the potential to change the rules of the game in solar materials through downstream integration – in that sense, this is similar to the PV module industry.

Question: In what respect could large integrated material suppliers affect the solar materials markets?

Haacke: Large integrated players are very different from the intermediate material converter companies by nature. The former implement integrated strategies, and design raw materials specifically for the PV end markets. They have a global reach and the financial power to extend beyond current practices of module design. They pursue a strategy of long-term value creation and devise material substitution scenarios rather than thinking only of the next quarter’s sales targets. In this way, they share many similarities with other industries such as the automotive industry. I have said it many years ago: To predict solar market developments, it is worthwhile to take a closer look at the automotive segment, in which consolidation, material substitution, and globalization are just a few very obvious parallels.

Question: Regarding material substitution, what are the most important innovation trends?

Haacke: Take PV cell packaging for example: We are mostly talking about transparent films or sheets, liquid packaging materials and a wide range of coatings and additives. Before large players started to develop an interest in this market, the PV industry had to accept materials that already existed. This was less than optimal in many cases. Today, we see more customized solutions, e.g., incorporating demands for increased system voltage and durability, and hence materials with higher electrical insulation properties. Also with PV markets entering more demanding climate zones, protection from weathering is being redefined. But this is just the beginning. Future innovation trends will take us beyond the substitution of one single component for another. At the moment, my team is looking into the complete redesign of how PV cells will be packed and protected.

Question: What could these designs look like?

Haacke: Simple, cost-effective, and providing greater protection and reliability. There is a need for fewer components, less overall material consumption and weight, lower processing costs and improved performance and durability. Before commencing the development of such a component or system however, future technical requirements need to be clearly established. This is not easy to do in the context of dynamic PV markets with uncertainties about future cell technologies and conditions of module deployment, to name but a few. The monetary value of such a new design also needs to be calculated early in the process; otherwise, it could turn out later that it was not worth the development or market introduction cost. Nevertheless, with potential markets worth USD 7B by 2020 and growing, this exercise is certainly warranted.

To find out more about business opportunities in the solar materials market, please contact Florian Haacke, Partner on +49 30 30 977 620 or via email.

Original Article on Apricum

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Interview with with Vahid Fotuhi, President of ESIA

Apricum: Saudi Arabia has just revealed its ambitious solar plan, foreseeing 41 GW of installed capacity in 2032. With this plan, is the Kingdom jumping to the top of solar markets in MENA?

ESIA: This is a huge initiative. It catapults Saudi Arabia into the pole position in terms of attracting investments in the solar sector. Everyone knew that the potential was there. Now Saudi Arabia has come out and communicated exactly how it will give life to that potential. The country’s solar industry is poised to become several times larger than all the other MENA solar markets put together. Essentially, all roads lead to Riyadh.

Apricum: Besides Saudi Arabia, Dubai has recently come up with a remarkable solar plan of 1 GW installed capacity and has already kicked-off an initial project of 10 MW. Is Dubai becoming an ever bigger solar market than neighbor Abu Dhabi, which has so far spearheaded solar development in the UAE through Masdar?

ESIA: Dubai managed to get its timing spot on – once again. It unveiled its solar program at a time when the global solar market was suffering from a supply glut and prices were at an all-time low. This will allow Dubai to attract a lot of investor interest, thus minimizing the subsidy it will have to pay to offset the difference between solar power and conventional cost of electricity. Dubai is also more motivated than Abu Dhabi to push ahead with its solar agenda given that it currently imports 99% of its fuel. Abu Dhabi, on the other hand, is energy self-sufficient. But building a local solar market is not a sprint, it’s a marathon. And I’m confident both will continue to lay the foundation for a healthy solar sector.

Apricum: Local content has become a key element of policy design in emerging solar markets. Will we hence see significant new manufacturing capacity being installed across the GCC countries in coming years?

ESIA: For manufacturing to take root in this region there needs to be sufficient business to justify the large capital investments. In Saudi, this will not be a problem. The challenge is to come up with the right product to manufacture. There will be a strong pipeline of commercial opportunities for the companies who are able to provide bankable quality, competitive pricing, and local manufacturing. In the other markets, such as the UAE, this is going to be more difficult because the domestic market will be considerably smaller.

Apricum: Several of ESIA’s members are foreign companies that are also active in other emerging solar markets, such as India or South Africa. Comparing the GCC to those markets, what is key to success in the solar markets at the Gulf?

ESIA: The key to success in the Middle East is long-term relationships. If you’re a German or American solar company looking to win projects in this region by showing up just when a tender is announced, then you will be disappointed. The best strategy is to start early and build the relationships and local partnerships that will plant the seeds for future success. And ESIA is a perfect partner for that. As the region’s leading solar association, we serve as the eyes and ears of international solar companies interested in learning more about this region.

Apricum: Let’s assume we meet again in five years to take a look back at the developments in the GCC solar markets – what will have been achieved by then?

ESIA: In five years, the Middle East will have become an established regional market, much like Europe in 2010. There will be opportunities both in long-term solar power purchase agreements as well as near-term EPC contracts. This will be fueled by the region’s growing appetite for energy coupled by its depleting reserves of hydrocarbon fuels. Thanks to its vast abundance of solar energy, it’s only a question of time before the region awakes and starts to flex its muscles.

Original Article on Apricum

Saudi Arabia: Future Solar Leader?

Saudi Arabia has launched one of the world’s most ambitious solar-energy programs today. At the Saudi Solar Energy Forum in Riyadh on May 8, officials from the responsible government entity King Abdullah City for Atomic and Renewable Energy (KA-CARE) announced long-term development goals as well as a policy framework. By 2032, the oil-rich country plans to generate almost a quarter of its electricity from solar energy, with 41 GW of solar power capacity. Next to the solar targets, plans to build wind, geothermal, waste-to-energy as well as nuclear plants were also announced. This massive program, worth tens of billions of dollars, would catapult Saudi Arabia into the group of global leaders in renewable-energy development.

KA-CARE declared its intention to turn Saudi Arabia into “the Kingdom of Sustainable Energy”. The main objectives of the program are a reduction in oil burned for power production as well as the establishment of a local solar industry and the creation of jobs.

Representatives from KA-CARE not only announced long-term targets, but also a detailed roadmap for the development of the solar market in Saudi Arabia starting immediately. The pillars of the program are at least two competitive bidding rounds for around 5 GW of utility-scale solar projects in total, with the first tenders being prepared currently and to be released in early 2013. The tender rounds will be followed by a feed-in-tariff scheme such as Germany’s successful program.

Saudi Arabia is ideally positioned to become one of the leading solar markets worldwide, with abundant sunlight, a rapidly growing power demand and unparalleled financial strength. Finally, the country is now tapping into this potential. Apricum anticipates that the Saudi program will trigger enormous activities both from international and local Saudi companies.

As a strategy consulting and transaction advisory firm specialized in renewable energy, Apricum has been instrumental in the development of the Saudi solar market, being active in the country for several years. On the one hand, Apricum advises Saudi companies on building comprehensive business development strategies in the solar sector. On the other hand, the firm supports foreign solar companies entering the Saudi market, e.g., by identifying the most suitable local partner company.

Are you interested in solar business opportunities in Saudi Arabia?

Drop us a line if you would like to receive a complementary copy of the latest Apricum’s Saudi Arabia country profile.

Original Article on Apricum