Siemens is one of the largest conglomerates in the world with a huge Green Division.This German Giant is present in almost all sectors of the upcoming Green Industry.Siemens is a Top 10 World Supplier  of Wind Turbines and has recently upped its investment into Solar Thermal Technology through the acquisition of pioneering CSP company Soleil Systems.This makes Siemens a formidable player  in the No.1 and No.2 Green Energy Technologies of  Wind and Solar.Note India under the JNNUSM plans to allocate half  of the Solar Energy Subsidies to Solar Thermal Technology.This is quite large compared to other parts of the world where the focus is mainly on distributed Solar Photovoltaic.Whether this makes sense or not is a different issue as Siemens can capitalize on its Technological Strengths to wind a large share of India’s Solar Energy Market.

Siemens established Office in India’s Leading Renewable Energy State of Gujarat

The company has opened an office in the city of Vadodra,Gujarat where it has hired 30 people.Note Gujarat is at the forefront of India’s Green Energy Efforts looking to set up 500 MW of Solar Energy in the next couple of  years.Siemens plans to set up a  Wind Turbine Manufacturing by 2012 and it would make sense for them to make Solar Thermal Components as well if the Market Takes Off.Note India’s JNNUSM specifices a 30% Local Domestic Contect Requirement for Solar Thermal Plants.While India’s Wind Energy Market is already crowded with most of the international players having a strong presence,the Solar Thermal Market is still a virgin one.

Siemens starts renewable energy business in India – ET

“The market outlook for renewable energies in India is extremely positive and we see a huge potential for the wind and solar business in the near future. With our Vadodara office we will strengthen our activities in this strategic market,” Siemens Managing Director Armin Bruck said in a statement here today. The firm has already employed 30 people and plans to ramp up the number to 100 within the first year of operation.

With over 8,700 wind turbines and a total capacity of more than 11 GW installed worldwide, Siemens will focus on providing high efficient wind turbines with low life-cycle costs to project developers and independent power producers in India, it said. The company plans to start wind turbine manufacturing by 2012

Spain and USA are the 2 leading countries in Solar Thermal Technology and Installations.These 2 countries have installed 90% of the World’s CSP capacity and are home to leading companies in this  technology.While USA boasts of pure play companies like Brightsource Energy,eSolar etc.,Spain’s CSP Leadership is  bolstered by the likes of Energy Conglomerates like Abengoa and Acciona.Solar Thermal Technology has been getting traction recently with California approving a number of Solar Thermal plants.These utility scale plants will be built over the next 4-5 years as CSP projects have a long gestation period.Spain on the other hand has  forcefully delayed the commissioning of CSP projects as it faces a massive Fiscal Deficit problem.To reduce the outgo of Renewable Subsidies,the government has arrived at an agreement with the Solar Thermal Industry to go slow in commission new plants.Abengoa has been affected by this agreement though it is a much less drastic cut on Renewables than was expected earlier.

CSP not to be competitive till 2020

Abengoa which is a leader in CSP Technology recently won a Billion Dollar Loan Guarantee from the US government to build a Solar Thermal Plant.The company thinks that CSP won’t reach Grid Parity till 2020 and may even take a further 10 years to achieve parity with the fossil fuel  energy sources costs.This makes you wonder if CSP is a technology worth investing in since  Photovoltaic Technology has already reached grid parity in some parts of the world and should reach parity in most parts by 2015.PV Technology has seen a rapid advance in technology and cost cutting over the past few years making the installation cost come down to $3.5-4/watt compared to $6-7/watt for CSP Technology.With a further 50% cost reduction expected by 2015,you would think that CSP Technology would become uncompetitive like so many Thin Film Companies.

Abengoa Solar sees little impact from tariff cuts – Reuters

Although the global financial crisis has pushed governments to sharply cut aid to the renewable sector, it has had little effect on costs in the solar mirror power sector compared with the photovoltaic (PV) sector, which uses solar panels to generate power.”We’ve see some reduction in prices, but nothing like in the PV sector. Costs per megawatt are between 4 and 5 million but they can reach up to six depending on the kind of power storage system you use,” Seage said.

Sector analysts put the average cost of CSP per megawatt at about 5 million euros before the global financial crisis, about six times more than for conventional gas-fired power generation.The high cost of CSP makes it unlikely to be competitive with conventional energy until the next decade, and that also depends on reasonable charges for carbon dioxide emissions.”We see CSP power becoming competitive between 2020 and 2030, depending on a country’s levels of radiation,” Seage said.



Spanish Government Facing a Tough Fiscal Situation;Plans Green Energy Subsidy Change

The Spanish Government has been  facing a tough budgetary situation due to sovereign debt problems afflicting Europe.The government is trying to structurally reform its Energy Sector to make it more competitive and dynamic.Spain has one of the largest  Renewable Energy Capacities in the world due to generous subsidies in the past several years.Though the solar market crashed in 2009 after a “gold rush” in 2008,the Solar Capacity of Spain still ranks No. 2nd  in the world.But these subsidies have started to pinch the government which is trying to reduce its Fiscal Deficit.Unlike other countries which pass on the higher Renewable Energy costs to the electricity consumers,Spain has been taking that burden on the Treasury.Recent talks between the Solar PV sector representatives and the Ministry led the association talk of  a “possible death” over the proposed retroactive subsidy cuts.There had been a huge alarm raised as there was talks about Spain cutting the guaranteed Feed In Tariff (FIT) for solar which would have led to huge losses for investors beside a massive legal mess. However the Spanish government in the last few days has Moderated its Subsidy Cut plans.

The Renewable Energy Subsidy Change Agreement

The Spanish Industrial Ministry and the Wind and Solar Thermal Sectors have already reached an agreement over the proposed cuts.These subsidy cuts will have very little impact on both of these sectors and will continue to allow them to achieve decent returns.Though the proposal has yet to be passed into law,it seems pretty much a done deal.Note the Solar PV sector and the Ministry have not reached a deal as of now indicating further tough negotiations.The agreement reached has the following features.

  1. Wind Energy Subsidies for Wind Farms built after Jan 2008 will receive 35% lower subsidies.This will apply to plant built from 2008 to 2012 end.
  2. The number of hours of operation from Wind Farms will be limited to 2350 Hours per Year for receiving higher electricity rates.However this will turn out to be a non-event as most wind farms operate far less than the 2350 hours.This will also apply to the CSP sector.
  3. Solar Thermal Plants will not receive favored rates for the first year of operations.There is also an agreement to “delay” the construction of these plants so as not to burden the government with subsidies in these tough years.Note CSP plants normally are much bigger in size and take much longer to permit,construct and start operations than Solar Photovoltaic (PV) plants.

Spain agrees on cutting tariffs for wind, solar power

Spain’s industry ministry has reached agreements with two key renewable energy lobbies, the Spanish Wind Energy Association and Protermosolar, aimed at reducing special tariff premiums for wind farms and solar thermal plants.The accords, disclosed late Friday following months of negotiations,would save around Eur1.3 billion ($1.6 billion) between now and January 1, 2013 largely through a 35% cut for the wind energy sector over the 30-month period.

Spanish Renewable Energy Companies see sharp increase in Stock Prices

This agreement has led to a major increase in the share prices of major Spanish Renewable Energy companies like Accionia and Abengoa.These firms have huge Solar and Wind portfolios and their stock had been battered due to the uncertainty over subsidies.With the agreement over the Energy Policy finally reached,the green  investment climate for the Spanish Renewable Sector has improved dramatically.

Iberdrola Renovables, Acciona Climb After Accord on Subsidies – Bloomberg

Iberdrola Renovables SA, Spain’s biggest operator of wind-power plants, rose in Madrid trading after the government announced a preliminary agreement with renewable-energy trade groups on subsidized electricity prices.The shares gained as much as 7.9 percent in Madrid while Acciona SA, a domestic competitor, advanced 6.5 percent. Gamesa Corp. Tecnologica SA, Spain’s biggest wind-turbine maker, rose as much as 3.2 percent.

Masdar’s Amorphous Silicon Division in Trouble

Masdar, Abu Dhabi owned Green Company plans to build a  Solar Thermal plant called “Shams 1″ near Abu Dhabi. Masdar PV has been in the news recently with the Dismissal of its top executives as its German Thin Film plant is facing trouble.Masdar PV sourced technology and equipment from Applied Material’s Thin Film Division which is struggling to survive against the onslaught of Crystalline Silicon (c-Si) competition.Applied Materials has drastically reduced support to its “SunFab” amorphous Silicon (a-Si) thin film technology with 90% drop in Poly Silicon prices making a-Si technology uncompetitive.Q-Cells and Suntech,two major customers of Applied Material’s SunFab product have already written off their investment.With these two Solar Stalwarts failing to make a-Si products viable,it is highly unlikely that Masdar PV will get much success from this venture.

Masdar partners with Abengoa and Total in Solar Thermal Plant

With Thin Film not getting much success , Masdar PV is apparently changing its strategy by building a 100 MW CSP plant near Abu Dhabi with Abengoa and Total as minority partners.Abengoa is a world leader in Solar Thermal Technology with considerable  experience in building and operating big solar plants in US and Spain.The role of France’s Oil Giant Total is not totally clear except the that company has some project experience in Solar Installations through its subsidiary Tenesol.Super Rich Abu Dhabi has been trying to make major investments in Renewable Energy through big bang projects like the worlds first carbon neutral city “Masdar”.Other countries in the Middle East like Saudi Arabia have also shown interest in establishing Solar Plants given the favorable solar conditions of the region.

Abengoa, Masdar to Build Biggest Mideast Solar Plant – Bloomberg

Abengoa SA of Spain joined Total SA and Abu Dhabi’s renewable energy company, Masdar, in building the Middle East’s first major solar power plant.The project, named Shams 1, will cost $500 million to $700 million and generate about 100 megawatts of power in Madinat Zayed, about 120 kilometers southwest of the U.A.E. capital city. Total and Abengoa each will own 20 percent of the project, with Masdar controlling 60 percent, according to a statement.

Shares in Seville, Spain-based Abengoa rose as much as 10 percent and traded at 14.46 euros, up 8.2 percent, at 2:25 local time.Abu Dhabi, holder of almost all the oil reserves in the United Arab Emirates, aims to position itself as a hub for renewable energy by building the world’s first zero-carbon city and hosting the headquarters of the International Renewable Energy Agency.Masdar already has a 10 megawatt photovoltaic, or PV, plant in Abu Dhabi. PV plants use solar panels, which convert sunlight directly to electricity. Concentrated solar reflects sunlight, usually with mirrors to heat liquids that generate power with steam turbines.

The Solar Thermal Space or CSP (Concentrated Solar Power) is seeing increasing consolidation with numerous acquisitions and partnerships . There are 3 main reasons for this trend

  1. Solar Thermal projects typically are built on a scale of Hundreds of Megawatts requiring large amounts of capital which is typically beyond a startup
  2. These CSP Projects also require engineering and construction capabilities which are again beyond startup capabilities
  3. Large Power Equipment and EPC companies like Bechtel,Areva etc possess the capabilities but lack innovative Technology in this space

The above 3 factors make the the sector fertile for partnerships and acquisitions some of which are  listed below

  1. Seimens bolstering its capabilities by acquiring CSP pioneer Solel Solar Systems for $418 million
  2. Bechtel partnering with Brightsource Energy in building a massive 440 MW plant in California
  3. Areva buying up startup Ausra which was facing funding difficulties
  4. Alstom taking a $55 million stake in series C funding of Brightsource Energy

Alstom today announced it is investing up to $55 million in BrightSource Energy Inc., with an equity stake that positions Alstom as one of the main shareholders in the company. This operation takes place as part of a capital increase of $150 million organised by BrightSource. This privately-owned company is a specialist in designing, building and operating tower based solar thermal power plants with operations in the USA, Israel and Australia.

BrightSource has contracts for a total of 2,600 megawatts with PG&E and Southern California Edison – California’s two largest utilities. To meet this demand, the company intends to build 14 solar power plants in the US southwest by 2016. BrightSource’s first U.S. power project, the 392 megawatt Ivanpah Solar Energy Generating System, is currently under development in San Bernardino County, California. On completion, the project will generate enough electricity to power more than 140,000 homes, and reduce carbon dioxide (CO2) emissions by more than 400,000 tons per year. The Ivanpah project has received conditional commitment for more than $1.3 billion in loan guarantees from the US Department of Energy (DOE). The first plant is scheduled to come online in the second half of 2012.

Meanwhile Consolidation in Solar PV has been Seriously Lagging Behind

While the consolidation in the CSP space has been fast and furious it has been seriously lagging behind in the Solar PV segment.This is mainly because most of the companies here lack any differentiation in process and technology.However its only a matter of time before the hundreds of companies are withered down to 10-20 as growing competition and price pressures l weed away the  weaker companies .

The only big acquisitions that have been done so far is by automotive parts giant Bosch buying Ersol and Aleo Solar (which I think seriously overpaid for a bunch of very ordinary companies).Considering the rock bottom valuations that some technology rich PV companies like Energy Conversion Devices and Sunpower are trading , this might be the right time for the Big Companies to make an entry .

The Indian thermal power sector is seeing huge distress due to the lower solar and wind prices which is making it very hard to sell coal-generated power in India. While solar power prices can be now bought at INR 2.5/kWh, thermal coal power prices were found to be quite high at INR 4.24/kWh in the medium term auction conducted last year. With no buyers for coal-based power at INR 4.24/kWh, a new auction to buy coal power has seen the prices go down to INR 3.26/kWh which is almost 25% below the price discovered last year. The crash in the price does not mean that the full costs will be recovered but for desperate coal power plants that have been constructed and do not have any buyers, there is little option. The fixed costs of the coal power plant are sunk and the thermal power producers will be happy to recover only a part of the fixed costs if they can sell power at all.

Solar Vs Fossil Fuel generation

Solar Vs Fossil Fuel generation

Also, read Major Indian power producers find low solar tariffs puzzling; unable to make decent returns

Some of the largest power producers in the country such as Adani Power, Jindal Power, GMR Energy, and Essar Power have put in the lowest bid from coal-based power projects in years. Many of these power plants were started in the last decade on the premise that they would be able to sell coal-based power at high prices using the merchant route when India used to face a shortage of power. PPAs were frowned upon at the point of time as merchant based power prices were almost 40-50% higher than the prices sold on a long term regulated manner. Now, that these plants have been built, the situation has entirely changed with the country facing a situation of surplus power and low wind and solar prices. The distribution utilities are now reluctant to buy power at prices higher than INR 3/kWh. This means that the thermal power producers are desperate to sell the power at any price.

Given that they can’t sell their power at reasonable prices, they would be happy to sell at prices where they can fully recover the variable costs and a part of the fixed costs. What has been worrying about the power producers is that major power buyers are refusing to sign long term power purchase contracts as the entire industry structure has changed with power prices going down each year due to advancement in solar and wind energy technology.

Also, read Coal Vs. Solar