Challenges and Opportunities in the Photovoltaic (PV)

Challenges and Opportunities in the
Photovoltaic (PV) Markets
Martin Supancic
External Financial Advisor, Machinery Division of Europe, Russia & NIS

Strategic M&A and Portfolio
Management for the Energy Industry
Amsterdam, the Netherlands

23rd – 25th January, 2012
Sojitz Europe plc
Düsseldorf Branch
Copyright © Sojitz Corporation 2004 1

Presentation Overview
About Sojitz
1. Global & European REN/PV Growth
2. Focus on German PV
3. Current Market Situation: Europe, USA, Asia
4. Shift in value chain towards local suppliers
5. Price history of PV modules and outlook
6. Strategic options post-nuclear era for European utilities and
shift in investment focus
7. Difficulties in obtaining leveraged finance in certain markets
8. Geographic and strategic opportunities:
1. Off-grid PV generation
2. Strategic partnerships (Morocco, South Africa, India,
Malaysia)


The History of Sojitz Group

Nissho Company Iwai Sangyo Company Nichimen Corporation
1892 Japan Cotton Trading Co., Ltd.
1902 Suzuki & Co., Ltd. established 1896 Iwai & Co., Ltd. established
established

Nissho Iwai Corporation 1982 Company name changed to
1968 Nissho Company and Iwai Nichimen Corporation
Sangyo Company merged

2003 Nissho Iwai-Nichimen Holdings Corporation established through
the transfer of shares by Nichimen Corporation and Nissho Iwai
Corporation, which become its subsidiaries
2004 Subsidiaries Nichimen Corporation and Nissho Iwai Corporation
merged to form Sojitz Corporation
Name of holding company changed to Sojitz Holdings Corporation
2005 Sojitz Holdings Corporation merged with
subsidiary Sojitz Corporation and company
name changed to Sojitz Corporation
2006 New Stage 2008 medium-term management
plan announced
2009 Shine 2011 medium-term management plan
announced

33
Copyright © Sojitz Corporation 2004

Corporate Data

Company Name Sojitz Corporation

Established April 1, 2003

Capitalization 160,339 million yen

President & CEO Yutaka Kase

1-20, Akasaka 6-chome, Minato-ku,
Head Office
Tokyo 107-8655, Japan

TEL +81-3-5520-5000

FAX +81-3-5520-2390

URL http://www.sojitz.com/en

Corporate
Board of Corporate Auditors
Governance Model

Stock Exchange Listings Tokyo, Osaka
(As of July 1, 2011)

44

Financial Information

 Consolidated Financial Highlights
(Year ended March 31, 2011) (As of March 31, 2011)
Total assets 2,117.0 billion
Net sales 4,014.6 billion
Net assets 355.5 billion
Ordinary income 45.3 billion Equity ratio 15.6%
Net interest-bearing debt 700.6 billion
Net income 16.0 billion
Net DER 2.1 times

55

Sojitz Group's Global Network

The Sojitz Group is a general trading company with a worldwide
network comprising over 500 group companies and operations in some
50 countries.

Number of Branches & Offices
Domestic: 7
Overseas: 91
Number of Subsidiaries & Affiliates
Domestic: 143
Overseas: 358
Number of Employees
Non-consolidated: 2,313
Consolidated: 16,270
(As of June 30, 2011)

66

Sojitz Group Snapshot

Japan China Asia & Oceania The Americas Europe, Russia & NIS Middle East & Africa
Machinery Division

 Smart city development
 Export of automobiles  Smart city development  Transportation infrastructure
 Industrial machinery  Water business  Solar power  Automobile distribution
 Smart city development
 Commercial aircraft sales  Transportation infrastructure  Automobile assembly, sales  Industrial machinery  Solar power
representative  Water business
 Automobile assembly, sales, and distribution; automobile  Plants  Water business
 Sales and brokerage of  Automobile dealerships dealerships
and distribution  Newbuilding orders, ship  Automobile dealerships
ships, ship chartering, sale  Industrial machinery  Industrial machinery
 Industrial machinery chartering  Plants and IPP
of ship equipment  Plants  IT infrastructure and service
 Plants and IPP  Solar power
 Sales of IT and related
 Business jets  IPP
equipment; solutions and
service; data centers

 Sales of various types of
Energy & Metal

energy (LNG, petroleum  Coal mines and coal trading  Oil and gas, including
products, coal, etc.)
 Sales of coal  LNG unconventional oil and gas
 Service station and tank
Division

 Trading of petroleum  Production of bioethanol;  Oil and gas  Oil and gas
storage operation  Sales of industrial minerals
products biopower generation  Nuclear fuel enrichment  LNG
 Sales of steel-making  Sales of various rare metals
 Rare metals (nickel, cobalt)  Nonferrous metals (copper)  Sales of biofuel  Rare metals (vanadium,
materials (iron ore, coal,  Sales of iron ore
etc.)  Nonferrous metals (alumina)  Rare metals (molybdenum,  Rare metals (tungsten) ferrochrome)
 Development of iron mines niobium)
 Sales of various rare metals
and industrial minerals and iron ore trading  Iron ore trading
 Steel products
Materials Division

 Sales and import of rare  Manufacture and sales of
Chemicals &

earths, lithium compounds methanol  Manufacture and sales of
Functional

and industrial salt  Rare earth mines dicyclopentadiene  Manufacture and sale of
 Sales of solvents and  Procurement of rare earths  Manufacture and sales of  Manufacture and sales of packaging materials
thinners  Sales of organic chemicals marine chemicals (potash, Metton® resins  Sales of solvents
 Plastic resins  Sale of resin compounds industrial salt)  Sales of butadiene  Sales of industrial films
 Sales of electronic materials  Sales of flat-panel display  Manufacture and sales of  Sales of plastic resins
 Sales of cellulose materials packaging materials
 Sales of cosmetics  Sales of plastic resins

 Sales of various foodstuffs
Consumer Lifestyle
Business Division

and food materials
 Chemical fertilizers
 Sales of grain and feed  Agriculture
 Wholesaling of foodstuffs
 Sales of processed seafood  Meat processing and
 Flour mills, port silos
 Fish farming  Foodstuff logistics packing
 Feed
 Tobacco
 Manufacture and sales of  Fish farming  Shoe purchasing
 Import of brand sundries Grain Woodchips
apparel  Woodchips and afforestation  Production of ingredients for
 Airport retail
 Sales of lumber  Industrial park development bread
 OEM textiles
 Sales of grain  Consolidation and sales of
 Apparel brands
 Bread production
 Condominium development specialized grain
 Rice bran oil
 Import and sale in Japan of
timber, plywood, etc.

77

Sojitz Corporation IPP Experiences (Conventional)

China
Egypt Tiansi （Coal/50MW）
Gas Fired Power Sojitz 12%
(1500-2250MW） Japan
Shajao C （Coal/1,980MW） Sawada (Diesel/14MW)
Sojitz 3% Sojitz 99%

Mexico Trinidad Tobago
Merida 3 （Gas/484MW） Trinity （Gas/225MW）
Sojitz 25% Sojitz18%
Vietnam * AES
Saudi Arabia
Phu My 3 (Gas/740MW）
Riyadh PP11（Gas/1730MW） Rosalito 3（Gas/541MW）
Sojitz 6.7%
Sojitz 15% Sojitz 50%
•BP, SembCorp, Kyushu
* GDF Suez
Monterrey 2（Gas/484MW）
Sojitz 50%
Vietnam
Oman •Gas Fired Power
Barka 3 （Gas/750MW）（2,000MW ）
Sohar 2（Gas/ 750MW)
Sojitz 11%
* GDF Suez / Yonden Vietnam
Nghi Son 2
（Coal/1200MW）
Sri Lanka Sojitz 16%
Asia Power（Diesel/51MW） * IP, Kyushu, Kansai
Sojitz 48.5%

In Operation
Indonesia
Coal Fired Power Awarded/ Under Development
(200MW）
Under Bid Preparation

* Main Partner/s

Sojitz Corporation IPP Experiences (Renewable)

Mixdorf Ground-mounted
24MW (100%)

Betzweiler Solar 3MW (100%) Hirokawa Wind 16MW (49%)

On Wind Energy 4.2MW (50%)
Eco Energy Japan 1.25MW (75.5%)
East Winds 4.2MW (50%)
Hayama Wind 20MW (51%)

ETH Bioenergia 600MW+Steam (25%)
Namibia – Luderitz 44MW
- under development

Wind Power Waste-to-Energy

Solar Power Biomass


SOJITZ CREDENTIALS ~ Oil and Gas

Client Client Client Client
Petrobras Petrobras Petrobras Petrobras
Petróleo Brasileiro SA Petróleo Brasileiro SA Petróleo Brasileiro SA Petróleo Brasileiro SA
Description Description Description Description
Ultra Deep Ocean Exploration Ultra Deep Ocean Exploration Albacora Oil Field Development Frade Oil Field Development
Platforms P-18/25/26 FPSO P-31/37
Sojitz Function Sojitz Function
Sojitz Function Sojitz Function U$170MM Equity Investment + Investment through FJPL,
Lease Financier Lease Financier ECA Finance Arrangement 18.26% stake holder
(total U$650MMl) (total U$450MM)
Year of Award Year of Award
Year of Award Year of Award 2000 2001
1991~1994 1995~1997
Country Country
Country Country Brazil Brazil
Brazil Brazil

Mobil Producing Nigeria Tangghu LNG Project Rasgas company ltd. Petrobras
Petróleo Brasileiro SA
Description Description Description
NGL recovering LNG production LNG production Description
REFAP HDT/RFCC/Coker/Utility
Sojitz Function Sojitz Function Sojitz Function E&P Contract Amount U$311MM
U$200MM Investor, EPC funding Investor
Project funding arrangement Sojitz Function
Year of Award ECA Finance Arrangement
Year of Award Year of Award 1998
1995 2001 Year of Award
Country 2001
Country Country Qatar
Nigeria Indonesia Country
Brazil

Strictly Confidential

SOJITZ CREDENTIALS ~ POWER

CFE CFE
CFE Comisión Federal de Electricidad EVN
Comisión Federal de Electricidad Comisión Federal de Electricidad Electricity of VietNam
Rosarito-III 541MW Combined Description
Merida-III 484MW Combined Monterrey-II 484MW Combined Phu My 3 717MW Combined
Cycle Power Plant BOO Project Cycle Power Plant BLT Project Cycle Power Plant BLT Project
Cycle Power Plant BOO Project
Sojitz Function Sojitz Function
Sojitz Function Equity Investment (50%), Project Sojitz Function
Equity Investment (25%) & Equity Investment (50%), Project Equity Investment (1/3 under
Development & Development &
ECA Finance Arrangement Sponsor Loan consortium with Japanese Utility) &
Sponsor Loan ECA Finance Arrangement
Year of Award Year of Award
1998 Year of Award Year of Award
1998 1999 2001
Country Country
Mexico Country Country
Mexico Mexico Vietnam

Client Client
SCECO-SAUIDI ELECTRICITY Client Client
CEB PowerGrid ALBA
Ceylon Electricity Board COMPANY- Western Region
Aluminium Bahrain B.S.C
Asia Power (Private) Ltd. Shoaiba 1 & 2 380kV Substation 400kV Oil Filled Cable Description
51MW Diesel Generating Power EPC Contract Underground Transmission Line Pot Line No.5 Rectifier Transformer
Plant BOO Project Project & Substation EPC Contract
Sojitz Function
Sojitz Function EPC Coordination & Sojitz Function Sojitz Function
Equity Investment (38.4%), Contract Management EPC Coordination & EPC Coordination &
Finance Guarantee & Contract Management Contract Management
Lubrication Oil Supply Agent Year of Award
1999 & 2004 Year of Award Year of Award
Year of Award 1999 & 2001 2004
1997 & 2006 Country
Saudi Arabia Country Country
Country Singapore Bahrain
Sri Lanka

Strictly Confidential

Place Sunshine Hours/Year Sunshine
Hours/Day

Yuma, Arizona, USA 4015 11
Phoenix, USA 3872 10.6
Asswan, Egypt 3863 10.6
Las Vegas, USA 3825 10.5
Dongola, Sudan 3814 10.4
Tucson, USA 3806 10.4
Faya-Largeau, Chad 3792 10.4
Kharga, Egypt 3791 10.4
Abu Hamed, Sudan 3763 10.3
El Paso, USA 3763 10.3

Source: CurrentResults.com


Yuma, Arizona, USA

Source: THE GEORGIA MINERAL SOCIETY, INC. Source: Rah Tours


Phoenix, USA

Source: blog.flickr.net/en/2011/07/08/phoenix-haboob/

Source: CENTER FOR GLOBAL DEVELOPMENT

1.1 Global PV Capacity
Annual Newly Installed Global PV Capacity (MWp)
100%
90%
80%
70% 3,238
60% 1,923 5,396 13,108
1,402
50%
40%
30%
20% 2,930
10% 590 1,861 3,521
179
0%
2006 2007 2008 2009 2010

Large-scale PV power plants (>500 kWp)

Small scale PV power plants (<500 kWp)

Source: Renewables Insight – Energy Industry Guides, Denis Lenardic, pvresources.com/EPIA

1.2 Comparative Growth Rates of REN in Europe
Annual average growth rates in renewable energy consumption (%), EU-27

Data source:
Eurostat. Energy statistics: Supply,
transformation, consumption
• all products - annual data.
• renewables and wastes (total, solar heat,
biomass, geothermal, wastes) - annual data.
• renewables (hydro, wind, photovoltaic) -
annual data.


1.3 REN Contribution to Energy Consumption in Europe
Contribution of renewable energy sources to primary energy consumption in
the EU-27

Note: The contribution of renewable energy
sources to gross energy inland consumption
(GEIC) increased in the EU-27 from 4.4 % in 1990
to 8.4 % in 2008. For the EU-15, the share of
renewables in total gross inland consumption
accounted for 8.6%, in 2008, falling substantially
short of the indicative target set in the White
Paper on renewable energy (COM(97) 599 final)
of 12 % by 2010
Data source:
Eurostat 2010. Energy statistics: Supply,
transformation, consumption, annual data:
• All products
• Renewables and wastes (total, solar heat,
biomass, geothermal, wastes)
• Rrenewables (hydro, wind, photovoltaic)
• Renewables (hydro, wind, photovoltaic)


1.4 Germany’s PV Market Remains Buoyant
German Solar Market 2010 vs. 2011

40%
2011 3,000 7,500
Year

2010 7,400

0 2000 4000 6000 8000

New Installed Capacity (MW)

Source: Bundesnetzagentur für Elektrizität, Gas, Telekommunikation, Post und Eisenbahnen

1.5 Analyzing the German PV “Juggernaut”

• Registered added capacity used to determine FiT
applicable 1.7.2012
Oct‟11-
April „12 • Oct-Dec ‟11: 4,150 MW capacity added

• Current results (details available @March ‟12) =>
degression of -12% as of 1.7.2012
Q4 2011 • PV installation costs dropping more rapidly vs. FiTs

• Added capacity >= 225 MW => -15% FiT
Jan-
• If current growth maintained, 2022 target reached end of
April‟12 2015

cap on newly installed German PV parks

German Economy Minister Philipp Roesler

1.2 Current Market Situation - Europe



European
FiT markets
cutbacks reaching
maturity

2012?
Reduction
Political Reverse
in EPC
pressures bidding
costs
Grid parity

Fierce price
Legal
competition
Insecurity
Credit (e.g.
(retroactivity)
crunch / Chinese)
Higher
Lending
Costs


1.7 Current Market Situation - USA

Budgetary
cutbacks

Fierce price
Situation competition
varies from (e.g. Chinese)
State to State
Import duties?
2012?

Political
Election Year
pressures


1.8 Current Market Situation - Asia

Off-grid

2012?


2.1 Shift in value chain towards local suppliers
EPC Price Germany - BSW-Solar Rooftop PV Price Index
6,000

5,000

4,000
(€/kWp)

3,000

2,000

1,000

-

Average Residential Customer Price for completely installed
Source: BSW-Solar 8/2011 rooftop PV modules up to 100 kWp (excl. VAT)

2.2 Price Performance of PV Modules and Outlook
Pricing of Different PV module types, according to Origin
3
2.5
2
€ / Wp

1.5
1
0.5
0

Mar-11
Jul-09

Jul-10

Sep-11
Nov-11

Jul-12
Jan-10

Jan-12
Mar-10

Mar-12
Sep-09
Nov-09

Sep-10
Nov-10
Jan-11

Jul-11
May-09

May-10

May-12
May-11
Crystalline Germany (up to Jan. '11 Europe)
Crystalline China
Crystalline Japan Explanatory notes: 1) Only prices for PV modules are published. 2) No prices for
Thin film CdS/CdTe endcrystalline modules must average turnkey solar PV 1.5 - 1.9, the price for thin
for
customers listed. For an
be multiplied by approx.
power system, the price

Thin film a-Si film PV modules by 1.8 – 2.5. 3) The listed prices represent the average
Thin film a-Si/µ-Si quotations in the international PV spot market.

Source: www.solarserver.com, www.pvXchange.com

2.3 German FiT on a Diet
German Feed-in-Tariff (FiT) Evolution for Installed Capacity of
>100kW
€ 0.5000
€ 0.4500
€ 0.4000
€ 0.3500
FiT

€ 0.3000
€ 0.2500
€ 0.2000
€ 0.1500

Ground-Mounted Conversion & Sealed Sites
All other Ground-mounted Sites

Source: German Renewable Energy Law (“EEG”)

2.4 The German PV “Fest” is Over

FiT for electricity fed into the grid from PV plants with an installed capacity
<=30kW as a function of operation start-up year

Cents / kWh
Reduction of FiT
through successive REN
Law Amendments

Source: Abendblatt

2.5 Strategic options post-nuclear era for European utilities
and shift in investment focus

Change in nuclear policy New Generating Capacity Challenges faced
• Plant Shut-Downs • Flexible operation & rapid • Electricity transmission:
• New energy sources start-up (e.g. pumped- wind energy (north) to
required storage hydro, coal, gas…) consumption (south)
• Renewables • Construction Time • Price mismatch: gas
• Delays in coal and lignite purchase (oil-price-indexed
plant construction (T24 procurement) & sales
steel alloy =>cracks in boiler contracts (declining spot
casings) prices)
• Growing intermittent
generation
Pan-European Energy Strategy Required – Germany Spearheading


2.6 Difficulties in obtaining leveraged finance in certain markets:

Alternative Financing
Options
State-sponsored
Entities
Multilateral Lending
(e.g. ECAs, Overseas Entities
Private Investment
Corporation (OPIC), (e.g. European
Pension funds Netherlands Investment Bank, Asian
Sovereign funds Development Bank,
Development Finance
(e.g. European, (e.g. oil exporting Company (FMO), IFC,Inter-American
North American…) nations, BRIC, Asian) Institution Financière Development Bank,
de Développement African Development
(PROPARCO), KfW Bank, regional
Entwicklungsbank, renewable energy
Japan Bank for funds…)
International
Cooperation (JBIC)…)


3.1 Opportunities in Off-grid PV Generation
• Advances offer new viable solutions
Technology • "Plug-N-Play“- solar modules & storage solutions

• No need for state-sponsored FiTs
Legal Framework • PPA (Diesel Parity of PV energy)

• Good fit between electricity generation & peak
consumption (e.g. air conditioning, water heating…)
Applications • Electricity fed into grid or consumed directly by client

• Financing in emerging markets
• Local regulation
Challenges • Lack of experience with PV (need for special LT
PPAs: 20-25 years): need technology/EPC partners
• Environment (e.g. temperatures, salt, seawater…)

• Ideally close to the equator (LatAm, SE Asia…)
• Maldives: PV project slashed electricity price from
Projects US$ 0.35 – 0.77/kWh (diesel generators with far
greater capacity than necessary=> costly!) to
US$0.25/kWh. Amortization: 5-6 years


3.2 Delivering Strategic Partnerships
Project Developers
• Identify suitable projects
• Liaison to local authorities (accelerate licensing/permitting process)
EPC Contractors
• Much experience in mature markets
• How to hedge risks in new geographies (e.g. local subsidiary, domestic contractors…)
Financial Entities
• Commercial banks, multilateral lending entities, state-owned banks (e.g. German KfW,
Japanese JBIC), ECAs (e.g. Japanese NEXI, Hermes…),
Governments
• Electricity boards/commissions
• State-owned utilities, grid operators, e.g. Masdar, Morocco’s MASEN
Sovereign Funds
• “Door openers” to their home markets, promote government policies, co-invest
outside domestic market
Co-Investors
• Banks, pension funds, insurance companies, family offices, trading companies, high
net-worth individuals, strategic partners (utility companies), renewable energy funds,
trading companies
Technology Suppliers
• Ready supply, favorable procurement conditions, access to newest technology

3.3 Strategic partnerships - Morocco

2020
2,000
MW
2,000
MW
42%
2,000
58%
MW
Renewable Energy
Kingdom of Morocco’s Solar Program
introduced Nov. 2009 - Moroccan Conventional Energy
Agency for Solar ENergy (MASEN)



Kingdom of
ONE 25% Morocco

Moroccan R&D
Law 57/09

PPA 1
MASEN Training

Interconnection PPA 2*
agreement
SPV
PPA 2* = PPA 1 – SPV tariff Local Industry



 MASEN invited interested parties to competitive tender process for the Design,
Construction, Operation, Maintenance and Financing
 Any solar technology is acceptable

Target COD: March 2015

500 MW



1st PPA for MASEN
• Current PPAs in Morocco drafted by ONE
• Hope that MASEN PPA will be similar to ONE PPA (bankable)
ONE PPA Snapshot
• Bidder is responsible on long-run basis for design, financing, construction, O&M
• Financial closing risk assumed by bidder. In case of failing to close by X date, loss of
development security & PPA termination, perhaps also compensation payments to
ONE.
• Retroactive changes risk in PPA model assumed by offtaker
• PPA termination provisions in case of SPV default: if ONE exercises right to terminate
PPA following SPV default (after construction completion) => termination payment
obligation. Will MASEN maintain policy?
• Project commercial operation date: ownership of plant will transfer from SPV => ONE
=> grants SPV “right of quiet enjoyment” on plant => SPV operates asset. Lenders do
not enjoy physical asset security, although accepted by market on other Moroccan
power projects.
• MASEN has already “secured” the site.
• SPV normally owned by successful bidders, however ONE reserves right to participate
in equity. “Instructions for Pre-Qualification” state MASEN‟s right “to participate in the
financing” of SPVs (whether debt or equity is unclear). If equity, perhaps requirement to
shareholder agreement in RFP.


Financial Requirements - Bidder must demonstrate:

• invested in 2 infrastructure projects in <= 10 years + total amount of
equity & debt >= US$800m
• a net worth >= $200m.
• Consortium bid: the lead member must satisfy criteria.

Technical Requirements - Bidder must:

• demonstrated development of thermal power plants Σ accumulated
capacity >= 500MW <= 10 years, minimum 1 thermal power plant (>= 100
MW, <=7 years)
• operated & managed thermal power plants Σ accumulated capacity >=
500MW, minimum 1 thermal power plant (>= 100 MW, 1 plant operating
>= 3 years)
• Consortium bid: the lead member must satisfy criteria.


3.4 Strategic partnerships - India

Jawaharlal Nehru National Solar Mission – part of Climate Change efforts
Country endowed with 4-7 kWh/m2/day

Proposed Roadmap
Application segment Target for Target for Target for
Phase I (2010- Phase 2 Phase 3
13) (2013-17) (2017-22)

Solar collectors 7 million m2 15 million m2 20 million m2

Off grid solar 200 MW 1000 MW 2000 MW
applications

Utility grid power, 1,000-2000 4000-10,000 20,000 MW
including roof top MW MW

Source: Central Electricity Regulatory Commission


Central Electricity Regulatory Commission (Terms and
Conditions for Tariff determination from Renewable Energy
Sources) Regulations, 2012
• Effective as of 1.4.2012 & remain in force for 5 years commencement date
• PV / Solar thermal Tariff Period = 25 years.

Single part tariff comprising following fixed cost
components:

• (a) Return on equity; (20% p.a. first 10 yrs, 24% p.a. 11th year onwards)
• (b) Interest on loan capital; (loan tenure 12 yrs, 70% Debt/30% Equity)
• (c) Depreciation;
• (d) Interest on working capital;
• (e) Operation and maintenance expenses;
• Normative capital cost of PV projects: ` 1000Lakh/MW for FY 2012-13;
Commission has right to deviate from norm => project specific tariff
determination
Capacity utilization factor PV project => 19%
O&M Expenses:` 11 Lakhs/MW for 1st operating year, escalated at the rate
Source: Central Electricity Regulatory Commission
of 5.72% p.a.


2nd auction: state-owned power trading company (NTPC Vidyut Vyapar Nigam) set price of solar-
generated electricity for national grid
• Average winning bid = 8.77 rupees (US$0.165/kWh) => ≈ 2x price of coal-generated power, ≈ -
27% compared to winning bids at 1st action (1 year ago)
• Germany pays ≈ € 0.1794 (≈ US$ 0.23/kWh)
Gujarat – India’s Largest Solar Program (so far 186 MW of 933 MW PV plants by 1/28/12 built)

• Electricity regulator pledges to pay 15 rupees (US$ 0.28/kWh for 12 yrs), ≈ 3 x wholesale
electricity market rate, PV plants meeting deadline.
• Promotes solar parks promising supply of: sites, distribution infrastructure, quick approval to
projects built in designated areas.
• Developers of projects under construction in India’s largest solar program granted extension
until Jan. 28, 2012 to complete plants without losing their premium rates (completion failure
= loss of FiT).
• Deposit of 5 mill. rupees (€ 75k)/MW of awarded capacity, forfeited if investors failed to build
plants on time.
• Investors asked for extension due to delays land acquisition, heavy rains blocking access to
sites. One company’s PV park location was changed three times by authorities, delaying
shipment of components due to lack of LoC (required secured land)
• GMR Energy Ltd. announced commissioning of first 25-MW solar power plant Gujarat’s Patan
district.
• Following 28/1/12 deadline: Gujarat plans rate ≈ - 30%, based on draft proposal


Dec. 2010: India‟s PV capacity 17.8 MW

• 2011 PV capacity x 20 => 356 MW (target @1,233) due to transmission
infrastructure problems, rains, and delays in financial closure

PV energy in India: generating employment
opportunities, preventing more rapid urbanization
• 60% of rural households in India do not have access to electricity

Rajasthan awarded 873 MW of PV under National Solar
Mission phase: Jodhpur, Jaisalmer, Bikaner, Barmer
• Rajasthan‟s advnatages: abundant land availability, solar radiation of 6-7
kWh/m2, raw material availability (e.g. zinc, molten salt, solar glass)


3.5 Strategic partnerships - South Africa

• IPP PP targets: 2016=3,725 MW, 2030=17,800 MW
Renewable • Socio-economic & environmentally sustainable growth,
Energy • Kick-start & stimulate the renewable industry in South Africa.
generation in • Eligible technologies: onshore wind, concentrated solar thermal,
IRP 2010-2030 solar PV, biomass solid, biogas, landfill gas, small hydro
• Department of Energy, Republic of South Africa
• Bid on tariff (bid > price cap = disqualified) + identified socio-
economic development objectives of Energy Department
• Tariff payable by Buyer pursuant to PPA between Buyer &
Project Company of a Preferred Bidder.
• Generation capacity allocated to each Technology
Characteristics • Max tariff that Bidders may bid based on IPP Procurement
Programme (IPP PP)=>RFP.
• Facility procured required to achieve commercial operation by
dates set out in RFP.
• Intention to introduce separate ‘Small Projects IPP PP’ for
electricity generation projects <5MW
• Pay non-refundable fee R15 000 / Bidder, complete the
RFP Access
registration form.


• Evaluated based on: price & economic development.
• Price => formula to calculate “equivalent annual tariff” for submitted MWh
Accepted
price => Points awarded based on 2nd formula
Bids
• Economic development: bidders must state their commitment to economic
development requirements

• Job creation, local content (special focus on local manufacturing), rural
community development, skills development and education, business
development, socio-economic development, inclusion of historically
marginalized
Evaluation • Price / Economic Development point allocation: 70 / 30
Criteria • Preferred Bidders = ranked highest, best placed bidders to satisfy maximum
allocation MW/technology.
• Selected Preferred Bidder: regularly reporting required on compliance
“price/economic development”, as stated in their bid, during project life
• Non-compliance: could result in eventual cancellation of PPA.

• Draft PPA, Implementation Agreement, Direct Agreement & Connection
Agreements = non-negotiable
Agreements • DoE reserves right=> revise draft agreements during IPP PP
• Bids must be accompanied by bid guarantee (R100,000/MW submitted in bid)
issued by 1st class South African bank


Biomass Biogas
12.5 MW 12.5 MW
PV Landfill Gas
PC: 1,070 PC: 800
1450 MW 25 MW
PC: 2,850 PC: 600

Concentrated Small Hydro
Solar Thermal
75 MW
200 MW
PC: 1,030
PC: 2,850

3,725 MW Small
Onshore
IPP Projects
1850 MW Procurement
Programme 100 MW
PC: 1,150

Eskom Holdings SOC Ltd. supplies ≈95%
Price cap (PC) in R/MWh S.A.’s electricity. Owns total capacity 41,200
Source: Department of Energy, Republic of South Africa MW ≈ 85% coal-fired power stations.


Dec. 7, 2011
28 bidders renewable energy tender Diversify away from coal

Σ 1,416 MW submitted by preferred bidders
Close financing: June ‘12 Construction Start: June ‘12

Pending Allocation in Remaining Phases: 2,209MW
4 Phases Pending

1st Phase Allocation
≈ 632 MW 150 MW 634 MW
(818 MW pending) (50 MW pending) ((1216 MW pending)
Source: Department of Energy, Republic of South Africa



First Bid
First Bid Submission Date 4-Nov-11
Selection of Preferred Bidders in respect of First Bid Submission Date 25-Nov-11

Signing and effective date of PPAs, Direct Agreements, Implementation 19-Jun-12
Agreements, and Connection Agreements and Financial Close

Second Bid
Notification by the Department of Second Bid Submission Date in 25-Nov-12
accordance with clause 9.5 of Part A of the RFP
Second Bid Submission Date 5-Mar-12
Signing and effective date of PPAs, Direct Agreements, Implementation 13-Dec-12
Agreements and Connection Agreements and Financial Close




Third Bid Submission
Notification by the Department of the Third Bid Submission Date in 14-May-12
Bidders to notify the Department of the information required pursuant to 14-Jun-12
clause 9.7 of Part A of the RFP if submitting a Bid Response in respect of
Third, Fourth or Fifth Bid Submission Dates
Third Bid Submission Date 20-Aug-12
Signing and effective date of PPAs, Direct Agreements, Implementation 31-May-13




Fourth Bid Submission
Notification by the Department of the Fourth Bid Submission Date in 29-Oct-12
Second Bidders Conference 3-Dec-12
Fourth Bid Submission Date 4-Mar-13
Signing and effective date of PPAs, Direct Agreements, Implementation 13-Dec-13

Fifth Bid Submission
Notification by the Department of the Fifth Bid Submission Date in 13-May-13
Fifth Bid Submission Date 13-Aug-13
Signing and effective date of PPAs, Direct Agreements, 26-May-14
Implementation Agreements and Connection Agreements and Financial
Close


3.6 Strategic partnerships - Malaysia

• Dec. 2011 Malaysian government passes law installing PV tariff
system
• PV FiTs (in EUR/kWh): 0.1807 (large PV) to 0.30895 (small PV)
• Duration: 21 years from Commencement Date
• Commencement Date: date installation is completed, grid
Legal connected & ready to produce energy for commercial sale
Framework • Max Size: 30 MW (Ministerial exceptions)
• Additional Bonus FiT => Criteria!
• Future FiT rates will subject to annual degression rates (similar to
Germany), applicable only to new installations as of 2013+. FiT will
not be reduced retroactively, but are valid over 21-years.
• Degression rate: costs expected to drop as technologies advance.

Regulatory • Sustainable Energy Development Authority Malaysia (SEDA)
Authority • Evaluates projects & assigns FiT

Average • 1400 - 1900 kWh/m² p.a.
Global
Irradiation • Germany: 1000 kWh/m², Spain: 1800 - 2300 kWh/m²



Description of Qualifying Renewable Energy 2012 2013 2014
Installation FiT Rates (RM per kWh)
(a) Basic FiT rates having installed capacity of :
(i) <= 4kW 1.2300 1.1316 1.0411
(ii) >4kW <= 24kW 1.2000 1.1040 1.0157
(iii) >24kW <= 72kW 1.1800 1.0856 0.9988
(iv) >72kW <= 1MW 1.1400 1.0488 0.9649
(v) >1MW <= 10MW 0.9500 0.8740 0.8041
(vi) >10MW <= 30MW 0.8500 0.7820 0.7194



Description of Qualifying Renewable Energy 2012 2013 2014
Installation FiT Rates (RM / kWh)
(b) Bonus FiT rates having the following criteria (one
or more):
(i) use as installation in buildings or building +0.2600 +0.2392 +0.2201
structures
(ii) use as building materials +0.2500 +0.2300 +0.2116
(iii) use of locally manufactured or assembled solar +0.0300 +0.0276 +0.0254
PV modules
(iv) use of locally manufactured or assembled solar +0.0100 +0.0092 +0.0085
inverters


• Ensures fair competition & transparency in
implementation of FiT system as stipulated under
Section 3 of Renewable Energy Act 2011
• Provide opportunity for many players to secure
share of limited PV energy quota

Category Rules for Solar PV (FiA) application
Category 1 : Individual (≤ 12 kW) maximum 12 kW per application;
normally for residential / households
(rooftop). Multiple FiA applications
on same installed site prohibited.
Category 2 : Non-individual (≤ 500 kW) maximum 500 kW per application
Category 3 : Non-individual (> 1 MW ≤ 5 MW) maximum 5 MW per application

Professional Investors – 2 Rules:
1) Applicants may apply for max. 500 kW/application for small PV system, or
2) Max. 5 MW for larger PV systems.

Thank you
Mr. Masayoshi Hirose
Deputy General Manager, Assistant to Division General
Manager Machinery Division of Europe, Russia & NIS
hirose.masayoshi@sky.sojitz.com
+49 (0) 211 3551 ext. 131
Mr. Thomas Riess
Sales Manager
riess.thomas@sky.sojitz.com Environment & Infrastructure Dept.
+49 (0) 211 3551 ext. 128 Machinery Division of Europe, Russia & NIS
Mr. Martin Supancic Sojitz Europe plc, Düsseldorf Branch
External Financial Advisor Am Wehrhahn 33, 40211 Düsseldorf
supancic.martin@sky.sojitz.com Germany
+49 (0) 211 3551 ext. 190, Mobile: +49 (0) 173 671 8698 +49-(0) 211-3551-0

Challenges and Opportunities in the Photovoltaic (PV)

Recommended

Recommended

More Related Content

What's hot

What's hot (7)

Similar to Challenges and Opportunities in the Photovoltaic (PV)

Similar to Challenges and Opportunities in the Photovoltaic (PV) (20)

More from Martin Supancic

More from Martin Supancic (12)

Challenges and Opportunities in the Photovoltaic (PV)