1. Keys to successful !
solar project!
development
IN THE US AND ELSEWHERE
Alejo Lopez
Director, Latin America Project Development
Young Professionals in Energy
November 13, 2012
2. About HSEA. About me.
A snapshot of current and future energy demand. Why are we here?
What is project development?
What matters most when developing a solar project?
What drives solar project development in the US?
What drives solar project development elsewhere?
Final Thoughts
Thanks & Contact
3. About Hanwha SolarEnergy America
Fully integrated solar solutions for utility and commercial/industrial customers
Integral part of Hanwha Group
à $89 billion in assets
à 10th largest Korean company; Fortune 350
3rd largest solar manufacturer in the world à Q-Cells
14 years of project development and EPC expertise
Direct access to > $200 million equity fund
Matt MacCullogh,
President and CEO
www.hseamerica.com
www.hanwha.com
4. About Alejo Lopez
HSEA: Director of Latin America Project Development - 3 months
Siliken: Manager of Project Development & Structured Finance – 3 years
Independent Consultant: Renewable energy, startups, energy strategy - 3 years
ECG: private sector development, cluster development - 3 years
Repsol: oil and gas E&P development – 5 years
Proud dad of two boys
Native of Argentina
MS Engineering, MBA
http://www.linkedin.com/in/alejoflopez
5. THE UGLY:
CO2 emissions at a record high, 34 bn tons in 2011, 2.5% growth from ‘10. China grew
6.5% in that period (IWR)
1.3 billion people without access to electricity
THE BAD:
Power demand will grow by 84% from 2009 to 2035, 80% in Asia (EIA)
China alone plans to add 600 GW of coal-fired capacity by 2035 (EIA)
Oil: to peak or not to peak à it doesn’t matter, unconventional oil will drive prices up
THE GOOD:
69 GW of solar PV installed to date in 2011, 5.7 GW in US
Solar was the largest new source of generation in Europe in 2011
Renewables expected to represent 50% of that change à Clean generation capacity will grow
to catch up with new demand
Net Electricity Generation by Energy Source, 2008
Source: EIA, 2012
6. Solar is the most abundant
source of energy on the
planet
900
300
23,000 240
215
Twy/year
25-70
3-11
2-6
3-4
Source: Perez & Perez, 2009
But it’s not perfect. To become a significant source of power, solar must overcome:
#1 - Continue to achieve grid parity à costs
#2 - Intermittency and dispatchability issues à storage
8. Solar could add between 380 GW to 600 GW by 2020, and growth will occur largely
outside of the US and Europe.
Source: McKinsey & Co.
9. Europe has the largest installed capacity, 52 GW, but growth will come from China,
India and Latin America
Source: EPIA
10. What is project development?
The process of taking an idea from concept to construction. "
Or, creating a solar project where none existed (thanks Cory).
What matters most when you develop projects? Lessons from the field
1. Project development – solar or not, is about people. Many people. Way too many
people. à Engagement is key.
2. It has to be a win-win
3. Create VALUE to your customer
4. It’s about location, location, location
5. Developing projects entails significant capital, time and risk tolerance. And lots of
patience and sense of humor as well.
11. Pre-Construction / Development Construction Operations
Site Selection
Process Module Supply
O&M Contract
Agreement
Site Control
EPC Contract Warranties
Site-Resource
Evaluation
Interconnection
Process
Permitting
Process
PPA/REC
Negotiation
6-36 months, depending on 15-30 years
3-12 months
project and location
Development Capital Construction Debt Tax Equity
Construction Sponsor Equity
Equity
Commercial Term Debt
Operation Date
12. Market Analysis Solar Resource Permitting and
Site Selection Interconnection
Evaluation (Regional)
Process Feasibility
Site Lease
Lease Option Title Review Gen-Tie Lease
Site Control Agreement
3-24 months, depending on size and complexity
Site-Resource Measurements Analysis
Evaluation
Interconnection Interconnection
Interconnection Study Process Upgrades/Deposits
Request Agreement
Process
12 – 36 months, depending on utility
Conditional Use
Permitting Technical Surveys Permitting Process Mitigation Plan
Permit
Process
9 – 36 months, depending on agency and project
Competitive
PPA/REC Terms Negotiation Deposits Executed PPA
Procurement/Bilateral
Negotiation
6 – 24 months, depending on utility procurement and
project
Depending on utility, interconnection, permitting
and PPA can be processed in parallel
13. Pre-Construction / Development Construction Operations
Value Created depends on project
size, location, resource quality, PPA Capital
price and overall project cost Invested
Risk
Development Capital Construction Debt Tax Equity
Construction Sponsor Equity
Equity
Commercial Term Debt
Operation Date
14. What drives solar development in the US?
• To date, renewable energy development has been mostly policy driven
• Federal : no carbon legislation; tax incentives
• State: RPS, net metering, tax incentives, utility programs
• Pure economics, to some extent
• Corporate sustainability programs (Google, Walmart, etc.)
Key Challenges
• Boom-Bust cycles à mostly policy driven (FIT/SREC)
• Over 3,000 utilities! à incentive programs, appetite for solar
• Attitudes about Environmental impact/opposition (NIMBY)
• Opposing/competing goals à
• Imperfect information à real cost of fossil energy
• Know when enough is enough
• Very very long interconnection cues (California)
• Project financing with tax equity
16. What drives solar development in other places?
• Every project needs land, permits, interconnection, PPAs and money, so
not a big difference here
There are different Goals, Culture and Attitudes
• Politics vs. Policy
• In general, lack of incentives à so, economics must work
• Although some good policies supporting renewables exist
• Economic development à jobs
• CO2 emission compliance
• Assess country risk early on
Challenges
• Culture of Doing business
• Language
• Access to key decision-makers
• Political and financial instability
• Land
17. Many developing countries offer a balanced risk-return profile with
the additional advantage of obsolete and expensive fossil generation
that needs replacement
Source: European Photovoltaic Industry Association, 2010
18. Final Thoughts
• Solar will be a key ingredient of the long-term energy mix
• Development is about people therefore win-win situations will drive long
term success
• It’s all about the customer and location!
• Development is similar around the world, but people’s attitudes and culture
and regulations are different
• Policy has driven solar growth in the US and Europe
• But sheer economics will put solar in the energy map
19. Thank you for your time.
Contact me
alejo@hseamerica.com
(949) 748-5996 x 240
