Cuts in subsidies to solar power will make the installation of new photovoltaic solar farms in Spain challenging, and foster a shift toward more roof-top plants, executives of U.S. solar power company SunPower Corp. (SPWRB) said Wednesday.
Cuts in subsidies to solar power will make the installation of new
photovoltaic solar farms in
Spain
challenging, and foster a shift toward more roof-top plants, executives of
U.S.
solar
power company SunPower Corp. (SPWRB) said Wednesday.
To adapt to the changed situation, the company plans to focus increasingly on
operation and maintenance services in
Spain
, as
well as expand in solar power growth regions elsewhere in the world, the
executives said.
Spain's "feed-in tariff for future installations is going to be much more
challenging for ground-mounted [plants] than for roof-top [plants]," Luis
Torres, SunPower's managing director for Southern European Development, told
Dow Jones Newswires in an interview.
"The market will prioritize roof-top over ground-mounted."
With more than 3.8 gigawatts in solar power generating capacity,
Spain
has
the world's second-largest installed capacity in that technology and in recent
years had been a key market for solar manufacturers. Most of that is in
photovoltaic power, which converts the rays of the sun directly into
electricity using solar panels.
Spain
's
government on Aug. 1 sent a final draft to the country's national energy
commission to cut subsidies for future ground-based photovoltaic solar plants
by 45%. Under the proposal, subsidies for large roof-top installations will be
cut by 25%, while those for small roof-top installations will be cut by 5%.
The ministry didn't say when it plans to issue the decree, or when the new
measures will kick in, but industry observers expect the decree to come into
force in coming months.
Spanish photovoltaic-power associations, following talks with the government,
say the government on top of that is also considering a retroactive cut in
subsidies for most already producing plants of about 30%.
"It's clear that any kind of retroactivity that may be considered will
provide a significant impact to the whole [solar] business model in
Spain
,"
Torres said.
While SunPower considers itself very competitive in the roof-top market, the
company also expects increasing opportunities in maintenance in Spain, even of
solar plants built with materials from other manufacturers, Kent Miller, sales
manager at SunPower Services, said.
Amid a "frantic" pace of construction in recent years, companies in
Spain have bought solar "materials from second and third-grade
suppliers," he said, that often require major maintenance or upgrading.
SunPower itself has sold 120 megawatt in solar-generating capacity in
Spain
since
2006.
While SunPower can't say for sure whether its business in Spain will decrease
due to the subsidy cuts, the company reckons it can balance out any possible
revenue losses in that market.
"On a global basis, we have increased our sales," Torres said. "What
we are losing in some markets, we are gaining in others."
The company expects its global revenue to rise to between $2 billion and $2.25
billion this year, from $1.52 billion in 2009, Torres said.
The increase will come mainly from
Italy
,
France
and
North
America
, Miller said. He added that other markets are also taking off, such as
Australia
, the
U.K.
and
Japan
,
which recently has introduced new feed-in tariffs for solar power.
Global demand for solar power is slated to rise, amid a fall in the costs of
the technology and an increase in electricity prices, Torres added.
As a consequence, photovoltaic solar power could reach grid parity in southern
Europe
in
2013, and in northern European countries such as
Germany
in
2015, he said. Grid parity is when the cost per kilowatt hour of electricity
produced by solar power is equal to or lower than the price per kilowatt hour
that consumers pay.
On
Spain
's
Canary
Islands
and in southern
Italy
the
cost of solar power is already close to grid parity, Torres said.
The solar industry currently produces electricity in the range of EUR0.22 to
EUR0.35 per KW/h, he said.
"As soon as we're reaching grid parity...we will see a very significant
increase in demand, because we will be cost competitive," Torres said.
Torres added that SunPower is currently considering joining the Desertec
initiative, which envisions building massive solar plants in the North African
desert that by 2050 could supply 15% of Europe's energy at an estimated cost of
EUR400 billion.
Last year, Munich Re AG (MUV2.XE), Siemens AG (SI), Deutsche Bank AG (DB) and
nine other mostly German companies formed a consortium called the Desertec
Industrial Initiative to promote the alternative energy plan that seeks
additional backers.
"We need to understand the whole context, time line, finance," of
Desertec, Torres said. "There are significant issues with grid
infrastructure that need to be addressed. We have no doubt that it's a
long-term initiative that looks very promising," he added.
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