Navigant Research Blog

Flexible Modules and Building Integration Drive the Specialized Solar PV Market

— October 20, 2016

Rooftop SolarAs global adoption of solar power has rapidly increased over the years, competition among solar product manufacturers and developers alike has become intense. As with all matured and competitive markets, the winning technology for the low-hanging fruit—in this case, ground-mounted traditional applications—has been picked. Crystalline silicon (c-Si)-based modules are expected to take the lion’s share of this market.

This means that solar projects suited for traditional products can be quickly signed and completed. But this has left a significant portion of the potential market unserved due to challenging building architecture or unique project locations such as highway luminaires, tents, awnings, or off-grid buildings that can’t bear the weight of a traditional solar panel.

New solutions addressing this area continue to come to market. Both building-integrated PV (BIPV) and flexible solar modules are helping to serve the needs of untapped consumers. This increase in manufacturing for both flexible panels and BIPV is expected to be in addition to the $40 billion global advanced c-Si solar module market by 2025, as forecast in Navigant Research’s recently published Next-Generation Solar PV report.

With such high stakes and attractive opportunities, new products are being launched and partnerships formed. Outlined below are three recent developments in the PV space regarding new flexible panel and BIPV product offerings or partnerships.

SoloPower Systems

SoloPower Systems recently announced a product release on the CIGS (copper indium gallium selenide) thin-film front. The company, which also produces flexible panels, has developed a packaged offering aimed at developing countries for off-grid applications. The package includes a panel, battery, connectors, a charger, and LED lights. In addition, the company recently began providing a financing option similar to a pay-as-you-go structure.

MiaSolé

MiaSolé, a subsidiary of Hanergy, recently released a new line of “flexible, thin, ultra-light, high efficiency, shatterproof CIGS modules” known as the Flex series. The company claims its new offering will open new solar markets and enable panel manufacturers to integrate solar on locations that have not previously been serviced.

The Flex series panels are approximately 17% efficient, much higher than previous flexible solar technologies. Furthermore, the components that house the panels are 4 times lighter than traditional rigid solar panels and are only 2.5 millimeters thick. With these characteristics, Flex panels can be designed to fit numerous non-traditional configurations and can be integrated into a BIPV design.

MiaSolé has also announced a new sales channel partnership with Inovateus Solar, the first major distributor of Flex series products. Inovateus provides design and installation work for BIPV products in the commercial roofing space.

Solaria

Panel producer Solaria recently announced that it is entering into a partnership to manufacture semi-transparent BIPV solutions with NSG Group, one of the world’s largest glass producers. The first of these new products will be launched in Europe, followed by distribution in the Middle East and elsewhere.

Although the economics are still challenging, these products are intended for customers that are looking for benefits other than ROI. The products in this arena can’t compete on economics alone; however, they are very suitable for projects where traditional panels are ruled out due to wind, weight, or other considerations.

Final Thoughts

As general solar power policies and building regulations related to PV continue to flourish at a rapid pace, so too will the growth of more specialized flexible and BIPV products. Meanwhile, the growth of traditional PV is simultaneously driving these specialized markets. Finally, increasing acceptance within the architectural community is also contributing to growth; aesthetic value will become more attractive once the overall cost of solar becomes a smaller fraction of the cost of a new building. Ultimately, these factors will ensure that the flexible module and BIPV markets will have an increasingly larger role within the overall PV industry during the years to come.

 

Can DER Bring the Cuban Grid into the 21st Century?

— October 18, 2016

Wind and SolarAs national relations with the United States and other nations continue to improve, Cuba is emerging as a potentially lucrative market for renewable and distributed energy development.  The country’s first utility-scale solar PV contract awarded in June 2016 highlights its potential to become a leading market in the Caribbean. The potential for renewables and distributed energy resources (DER) development in Cuba and throughout the Caribbean stems mainly from the region’s extreme dependency on imported fossil fuels. Furthermore, Cuba has a number of very old thermal power plants and decaying grid infrastructure that must be modernized to improve reliability and meet the country’s increasing demand for electricity. Cuba also has significant renewable energy resources and a goal to generate 24% of its electricity from renewables in 2030, up from just 4% today.

Opportunities and Challenges Abound

Improved diplomatic relations are driving rapid changes in Cuba’s economy, including large-scale wind and solar PV facilities already under development. Island electricity grids inherently have less stability than large continental systems and have traditionally struggled to effectively integrate large amounts of renewable generation. As a result, many islands—including Puerto Rico and parts of Japan—require that new large solar plants include a set amount of energy storage capacity. This could likely become a requirement as the Cuban solar market matures. Energy storage both centrally located and distributed in buildings can allow for the stable integration of renewables by smoothing output and controlling ramp rates, as well as optimizing these new resources by aligning renewable output with demand by time shifting energy. Navigant Research’s Energy Storage for Renewables Integration report explores the dynamics for these technologies specifically on islands.

Some of the earliest opportunities for DER development in Cuba may be the island’s numerous tourist resorts. Resorts around the world have demonstrated a willingness to invest in DER to improve the reliability of their power supplies and to develop images as eco-tourist destinations. This can provide opportunities for DER providers focusing on the commercial and industrial sector, particularly companies offering innovative financing programs such as power purchase agreements (PPAs). This model is demonstrated by the power system developed by EnSync Energy (formerly ZBB Energy) for a resort in French Polynesia that includes solar PV, energy storage, a local biofuel generator, and advanced controls for system optimization.

DER Barriers

Despite this potential, a number of barriers still exist in the Cuban DER space. The country’s electricity market remains state-run, along with most of its economy. In order to realize its renewable energy ambitions, Cuba will require foreign investments and technical expertise. The government is already looking at some level of market deregulation that would encourage investment by allowing foreign companies to own energy generation (and potentially storage) projects. These changes could provide a much-needed boost to the market; however, the Cuban market regulators will likely need to further formalize policies to instill confidence in foreign investors and financiers.

 

Should We Worry About Carbon Dioxide Emissions From Natural Gas Surpassing Coal?

— September 13, 2016

Smoke StacksAccording to the US Energy Information Administration, in 2016, CO2 emissions from natural gas are expected to surpass coal emissions in the United States for the first time since 1972. As CO2 emissions from natural gas increase due to growing natural gas consumption in the energy sector, major concerns have developed among environmental groups and others about natural gas becoming a threat to climate change. However, to generate the same amount of power, natural gas emits only 55% of the CO2 compared to coal. As natural gas displaces coal, CO2 emissions that could have come from coal will be cut by half. As long as the growth of natural gas is at the expense of coal consumption, it will help the fight against climate change.

It would be ideal if both natural gas and coal could be replaced with renewable energy such as solar and wind. However, when the sun doesn’t shine and wind doesn’t blow, electricity still needs to be generated. Even with cutting edge technology on energy storage, demand-side management, and energy efficiency, the need for stable electricity generation from reliable sources cannot be fully eliminated. Natural gas is by far the best option for such a reliable source due to its affordability and abundance in the United States. Besides the benefit of fewer  emissions, the price of natural gas is also competitive with coal. The United States is also the largest natural gas producer in the world thanks to the boom of shale gas. In general, as more renewable generation capacity will be added than fossil fuel capacity this year (and likely in the next few years), natural gas is essential as a backstop for grid operators to address the intermittency of renewable energy.

The Problem of Methane Leakage

Nevertheless, natural gas is not perfect. The methane leakage problem could seriously undermine the climate benefit of natural gas. At the same time, the US Environmental Protection Agency is making crucial progress in setting regulations on restricting methane leakage. With proper regulatory incentives and continuing technology improvement, the effects of methane leakage can be contained to make natural gas a viable complement to a lower carbon future.

 

Europe’s Energy Transition Megatrends and Tipping Points, Part I: Take Control of Your Future

— August 3, 2016

Energy CloudThe pace and impact of change in the utilities industry globally is unrelenting. Europe is no exception, and you could argue that the pace of the energy transition in Europe is faster than anywhere else in the world. The European Union (EU) as a market is the largest energy importer in the world, importing 53% of its energy at an annual cost of around €400 billion (~$447 billion). This drives many aspects of energy policies, including placing the EU at the vanguard of grid reform over the past decade. In this blog series, we will share our view on the energy transition in Europe by describing the megatrends and tipping points. Each of the following megatrends is changing the way we produce and use power in Europe. Together, these megatrends are revolutionising the energy industry.

1. Rising number of carbon emissions reduction policies and regulations: The long-term impact of the Paris Climate Agreement will be significant. The agreement will focus on limiting global warming to well below 2 °C (3.6 °F) by the year 2100. A record number of countries (175) signed the agreement, which they must now each ratify and approve, which could take some time. But European countries, provinces, cities, and utilities are not waiting. They are taking actions now toward the outlined objectives and targets of the agreement. In fact, sustainability objectives between government, policymakers, utilities, and their customers are more closely aligned than ever before. Globally, numerous cities have committed to 100% clean energy, including European cities like Copenhagen, Denmark; Malmo, Sweden; and Munich, Germany. The EU has shown no signs of slowing down in its ambition to standardise reform across unique markets through regulatory and policy momentum. A single energy market for EU member states is an enabler—if not a necessary condition—in a policy of an “ever greater union,” with or without the UK. Meanwhile, the UK has enacted legislation to deliver emissions reductions consistent with the 2 °C target through the Climate Change Act of 2013 and the commitment to remove 100% of coal-fired generation from the UK system by 2025. As the EU moves with ever greater momentum, Navigant believes other European countries in the hinterland around the EU will also be swept along. This is in part because these counties will seek to gain from the triple bottom-line benefits (climate sustainability, increased efficiency and productivity, and greater energy security), and in part because the EU as a trading partner will require compliance with these standards, policies, and regulations.

2. Shifting power-generating sources: According to the U.S. Energy Information Administration (EIA), net European generation capacity will increase by 7 GW in 2016. Much of Europe’s new capacity now comes from renewables, with close to 75% of new capacity coming from wind (44%) and solar (29%). While some new coal (16%) and gas (6%) capacity was added, far more coal and gas assets were decommissioned. As a result, net new capacity in Europe is virtually 100% renewables. While recent solar subsidy cuts have tempered its growth, wind is marching inexorably onwards. There is still no effective utility-scale solution to the inherent intermittency in renewable generation, with storage solutions and grid interconnection/active management still lacking penetration at scale. Natural gas is therefore the obvious bridging fuel during the shift to renewables. Given the abundance of natural gas availability globally, lower long-term prices, and increasing import capacity in Europe, we expect more natural gas generation capacity to come online in the future, at least for the mid-term. More traditional generation assets, particularly coal and nuclear, face an uncertain future. For coal, every scenario looks dark—at best bad and at worst grim. Older coal plants are being phased out; others are being converted to burn biofuels. Nuclear power accounts for 25% of all European electricity consumed, and any change in nuclear’s role in the generation mix will take time to implement. However, nuclear power highlights the significant differences in national energy policies across the EU and the wider European context. Nuclear was effectively killed in Germany, yet still may enjoy a renaissance in the UK if the British government decides to move forward, and new plants are under construction in France, Finland, and Slovakia. Germany has undergone the most significant generation source transition in Europe: it leads the market in renewables capacity, while its nuclear decommissioning programme has been accelerated. As a result, its two largest utilities are separating their businesses to focus on the one hand on renewables, grid modernisation, and distributed energy resources (DER), and on the other hand traditional generation and trading. Germany has become a net exporter of power and the knock-on effects of this shift in power generation sources means neighbouring countries have had to significantly change their networks to manage the impact of intermittency on their own systems and more investment in their own grid.

3. Delivering shareholder value through mergers and acquisitions (M&A), restructuring, and divestment: New industry ventures, M&A, and divestitures are happening at a rapid pace. In the search for shareholder value through scale, increased synergies, and reducing exposure to less performing businesses, this is a path that utilities will continue to explore. European renewables leader DONG Energy became the largest IPO in 2016 with a valuation of approximately €13.5 billion (~$15 billion), and RWE Innogy is slated for its own IPO by year-end. Engie and Centrica are investing billions in creating new DER and energy services businesses with numerous acquisitions. EDF, Enel, and others continue to acquire assets outside Europe in a search for global expansion and shareholder value. All this has been occurring while much of the 2016 M&A activity so far has been the divestment of non-core assets, with 1 GW of utility-owned wind assets sold to investors in 2016.

4. Globalisation of energy resources: The EU actively seeks to deliver Europe’s 2030 climate and energy targets while ensuring security of supply and affordable prices. The EU also seeks to be a world leader in renewable energy. Achieving these goals requires a transformation of Europe’s electricity system, including the reconfiguration of individual member state electricity markets into a single energy market. The EU must also achieve a balance with meeting consumers’ expectations, delivering benefits from new technology, and facilitating investments in renewables and low carbon generation while also recognising the interdependence of member states. A critical part of this initiative is connecting isolated national and regional electricity systems to secure supply and helping to achieve a truly integrated EU-wide energy market—a key enabler for the continent. While the UK’s vote to leave the EU raises a number of questions about future policy, it is too early to call what impact Brexit will have on the UK’s participation in the EU’s future single energy market. What is clear is that a focus on greater levels of interconnection (both offshore and onshore) and energy efficiency will continue to be necessary aspects of EU energy policy and will continue to receive much scrutiny.

5. New entrants and converging industries: With €1.3 trillion (~$1.5 trillion) in new industry value up for grabs globally, new entrants see value in European power markets, which is disrupting the traditional utility industry and taking market share away from utilities. These new entrants include manufacturers; technology companies (from startups to global powerhouses like Apple, Amazon, and Google); telecommunications and other data, content, and network providers; and even some oil & gas companies (like Total). For utilities, it will become more expensive to address a smaller market with the resulting impact on margins. Europe is no exception, and with significant opportunities for growth across the value chain and new energy and digital technologies available, we see new entrants investing in renewables, DER (distributed generation, energy efficiency, demand response, energy efficiency, etc.), energy management, smart cities and infrastructure, and transportation. Navigant sees many cross-industry movements between utilities and oil & gas. Shell getting back into renewables and Total announcing the creation of a Gas, Renewables and Power division—which the company has said will help drive its ambition to become a top renewables and electricity trading player within 20 years—are examples of this new competition’s encroachment on traditional utility markets.

6. The power of customer choice and changing demands: Whether residential, commercial, or industrial, customers want to control their electricity usage and spend, as well as when and what type of power they buy. But beyond having supplier options (in competitive markets), customers now want the ability to self-generate and sell that power back to the grid. Many residential customers in Europe have and will continue to install rooftop solar, and despite the reduction of subsidies in some countries, overall residential distributed generation will continue to grow. On the commercial and industrial side, large corporations like Amazon, Apple, Cisco, Google, HP, Mars, and many other large energy buyers in Europe have increased their focus on sustainable energy solutions. For example, Swedish furniture retailer IKEA plans to completely shift to renewable energy by 2020 and will invest up to €1.5 billion (~$1.7 billion) in wind and solar energy as part of new safeguard nature strategy. The company does not rule out becoming a net energy exporter, potentially selling the surplus of energy to suppliers or customers. The key question is who will capture the value of more local (distributed), broader (energy management), and individualised energy—the incumbents or the disruptors?

7. The emerging Energy Cloud: Old infrastructure is being replaced, and the trend toward a cleaner, distributed (flexible), and smarter energy infrastructure, known as the Energy Cloud, will accelerate. The Energy Cloud is an emerging platform of two-way power flows and intelligent grid architecture expected to ultimately deliver higher quality, greener, and more affordable power. While this shift poses significant risks to incumbent power utilities, it also offers major opportunities in a market that is becoming more open, competitive, and innovative. Fuelled by steady increases in DER, this shift will affect policy and regulation, business models, and the way the grid is operated in Europe. The work by EU member states in decarbonising and digitalising the grid has made the region a global leader in energy transition and puts Europe at the forefront of testing Energy Cloud reform through policies that mitigate carbon emissions, expand the role of distributed generation, and promote smart grid initiatives.

These megatrends cannot be underestimated. They are accelerating transformation in the European energy industry, enabling the entry of new players, putting pressure on incumbent players, and altering traditional strategies and business models. Organisations will need to adapt, and there will be winners and losers as this transformation takes shape. Our advice to senior leadership of energy companies is to take an integrated, holistic view of the opportunities and challenges that are flowing from these megatrends. Only then will you be able understand the full impacts and path forward—and that is the only way you can really take control of your future.

This post is the first in a series in which we will discuss each of the megatrends and the impacts (“so what?”) in more detail. We will attempt to discuss how these megatrends play out at the European level as a whole, as well as within the diverse set of regions and countries. Stay tuned for our next blog in this series.

Learn more about our clients, projects, solution offerings, and team at Navigant Energy Practice Overview.

 

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