"The market we will face in 2016 is a market of renewable energy in continuous evolution”, says Jarno Montella, CEO of Hanergy Thin Film Power Italy and Senior Vice President of Hanergy Europe and Middle East.
Recently Hanergy is starting to execute its strategic plan for the coming years and will share some of the key points with QualEnergia.it. In a 360 degrees interview Mr. Montella will tell us about the current situation and future prospects of renewable energy in Europe, Middle East and China.
Mr. Montella, with 2015 behind us, what do you think about the current situation of the markets for renewable energy infrastructure in Europe, Middle East and China?
In the last 2 years we have seen a profound transformation of the renewable energy market in Europe, which has had a sudden initial growth thanks to governments’ incentive policies, but slowly those incentives decreased through time. This trend is leading the market to a process of concentration where fewer players are operating and it also leads to the increase of internationalization of the operations since the players go searching opportunities in emerging markets. We have been discussing with local governments about some interesting opportunities to improve or renew energy infrastructure in the Balkans and eastern Europe, which would lead to a more integrated and balanced European energy market.
The Middle East, where Hanergy is active since a few years, is a growing market, which all industry players have kept their eyes on. The infrastructure issue is currently a hot topic in these markets. We are talking about countries with small populations and vast desert areas, where the high-voltage power lines are still being developed. We have had many discussions with local governments, e.g. Jordan, that also highlighted the importance of grid infrastructure as well as clean energy generation.
China is a market in which Hanergy is strongly present. The Country still has a certain infrastructure gap relative to the electricity grid, but it is growing with paces that are extremely sustained, so we are confident that the gap will be recovered and exceeded. Only in 2016, it is expected to have almost 20 GW new installations of photovoltaic power plants. This is more than 30% of a global total 65 GW. The target for 2020 is seen to rise consistently in accordance with the economic growth, but also because it is absolutely essential to solve the environmental problem.
What are the prospects in these markets?
Europe remains the target market in terms of the track record of the operators and what will probably be the new trends in the industry are already starting to emerge with force: distributed generation, storage systems and energy efficiency. Operators will continue to work hard on small and medium sized plants, and we will see upgrades that will increase the efficiency and reduce the consumption. We also expect the solar sector to become part of a culture of energy efficiency that will see new constructions, introducing innovative solutions, perhaps using flexible, transparent or colored photovoltaic panels. Hanergy is ready to offer a list of these type of products.
The Middle East offers the prospect of rapid growth when it comes to including innovative solutions into new buildings. Markets such as Kuwait and the United Arab Emirates already have some very interesting projects, and Saudi Arabia is also going in that direction. In the short term, however, it will be large plants that will drive market growth. Currently, the two countries that are most active are Jordan and the United Arab Emirates. Jordan has closed 2 rounds of tenders in which the government has awarded 400 MW of PV.
The United Arab Emirates have issued, through Dewa, a tender of 800 MW of solar power systems (in addition to the 200 MW awarded to Saudi ACWA Power in 2015, which means a total of 1 GW). We also expect Saudi Arabia playing a major role in the renewable energy market, they plan to reach 54GW of installed capacity from renewable sources by 2030.
China launched a series of policies to support the development of the PV industry during the 13th Five-Year plan. It is expected to have an annual growth of 20 GW in the coming years. China is the largest market in the world, together with the United States and Japan it covers 65% of the world demand. Only in the first few months of 2015, China has already installed 10 GW of new photovoltaic systems, 3.8 GW more compared to the same period of last year.
With large market potential and favourable policies, there is a continuous growth of PV in China in 2016.
Can you give us some information about the projects that Hanergy is working on?
In September 2015 Hanergy signed a framework agreement with the Government of Jordan for a private initiative of 1 GW new capacity of photovoltaic (600 MW) and wind power (400 MW). We are also working on some large hydroelectric project, which will have an installed capacity of several gigawatts, e.g. the one on the border between China and Myanmar, a hydroelectric plant of 1.4 GW under construction.
However, the biggest surprises will come from areas other than the traditional energy generation. Hanergy’s vision in the mid-long term is the introduction of the concept of “mobile energy”, using highly efficient photovoltaic cells in unconventional applications. We are investing heavily on R&D to be the first to go down this road. In the Chinese market, besides our 6 GW of hydropower plant and 131 MW of wind power, we have built a 10 MW plant on the rooftop of a Volkswagen factory in Guangdong Province, 17 MW on a factory of Honda and in October, we installed 27 MW of our transparent panels on greenhouses in the Fujian Province and a second phase of 23 MW will start soon.
We are also glad to see that our 40 MW agricultural photovoltaic project (which is currently the largest installation in China) in the Shandong Province, has been successfully installed during December 2015.
The project in Jordan seems to become more and more concrete, can you give us more information?
The framework agreement provides that the target of 1GW will be approached by the implementation of the first tranche of 100MW solar project, for which we’ve already identified the area and set the value of PPA. Now we are finalizing the funding agreements with some of the most important banks in the world. We have also received several expressions of interest from investors interested in joining us in the project which we are considering: this is something new for Hanergy, as we usually invests 100% in our projects. The plant will be divided into two lots of 50 MW each and will be built using our thin film technology.
We are very optimistic about the future of this project, our goal is to have an important role in reshaping the energy production in Jordan, as well as to complete one the most important initiatives of this kind in the world.
What are the opportunities, current and future, that you see in the Middle East market?
As I mentioned before, the Middle East offers attractive opportunities on large-size plants and even with more modest investment returns, they generate stable cash-flows which are particularly attractive to industrial players. This makes the market less prone to speculative financial bubbles and the government policies of local content will help to create a long lasting local industry. Soon there will also be new opportunities related to distributed power generation across the region. Dubai has already launched projects like the Hotel Indigo, which will be ready in 2017.
The hotel will powered 100% by solar energy and it aims to achieve full energy independence through renewable sources. With such prospects, Hanergy will not be out of opportunities.
And what about Italy?
Italy remains one of our key markets, we are determined to continue to contribute to the growth of renewable energy in Italy and we continue to believe in the possibility of a revival of large-scale plants in Italy, but this time in grid parity, a type of investment suitable for industrial players like Hanergy. In this regard, we are currently reviewing a number of big plants already authorized with the aim to develop the right strategy to achieve grid parity and we are looking for partners interested in this opportunity.