By Wang Meisi
The Energy Studies Institute organised a one-day conference which brought together experts from government agencies, research institutes and solar companies on a common discussion topic of the future of solar PV, internationally, regionally and locally.
The International Energy Agency (IEA) started the day with a comprehensive discourse on the trends in solar energy for the next few decades, outlining the fastest growth in capacity of both solar and wind energy in countries like China, Japan and USA. Outside of Europe and in emerging economies like Africa, there has been significant reduction in cost of capital, allowing speedy expansion of solar. Key elements to success in solar include good financing and PPAs (Power Purchasing Agreements).
The presentation was substantially flavoured with insightful statistics and figures backing up the predictions: Projection of solar energy growth of 400 GWp to 500 GWp by 2020 and 560GWp by 2025 to meet climate change objectives. And with conservative calculations, to reach 16% of energy market in 2025. However, further actions are needed for the estimations to be precipitated. For example, system integration, policy framework and financing as well as government setting aside long-term targets to help finance, distribute and facilitate the uptake of solar on a larger scale.
Solar leasing is a crucial way of encouraging the uptake of solar installations. Through the shifting of risks and financial burden of capital costs to the lessor, building or house owners have an added incentive to join the game. Not only are the modules financed by investors, lessees get to reap rewards of harvesting solar energy by being green with zero or low cost. Currently in Singapore, town councils are managing the solar leases with HDB flats and paying for the power generated at lower than retail rate. The latest tender awarded Sunseap with 38MWp for 680 HDB flats and HDB-owned buildings with the solar system installation cost borne by the company.
The Situation in Singapore
Phoenix Solar came in to shatter myths hindering solar developments in Singapore, busting old-aged tales of how intermittency will cause solar power to be unreliable to deploy on a national scale. Blessed with plentiful rain throughout the year, intermittency during days of storms can cause intensive drop in aggregate output. However, data showed that the average monthly fluctuation is around 20% which was claimed to be an insignificant cause for worry.
Now, installation of solar panels is decentralised and diverse across Singapore, totaling around 9 MWp. It was predicted that solar could contribute up to2 GWp by 2025 (1/3 of total demand in Singapore) and 600 MWp by 2020, as grid parity has already been achieved ($0.23kWh for solar and $0.21kWh for gas).
Singapore is particularly blessed with government support and efficacy in facilitating the growth of solar industry locally. In countries such as Thailand, hindrances such as the lack of government funding, prohibitive rules and inefficacy in pushing out key projects remain as reasons for falling behind. For example, inflexible rules such as the need for a factory license before installing a solar panel with 10kWp capacity occludes solar PV installation on residential roof tops.
The top three PV success factors include having: i) a good business model, ii) cost of equity, debt and construction capital, and iii) refinancing and/or exit plans. One of the ways to achieve the second factor is to get investments. Though solar PV is already traded as a commodity in the markets and repackaged as financial instruments globally, Singapore does not have a large enough pool for securitization. Thus, one of the ideas which sprang up in the conference was to make Singapore a secondary market for the region.
From a regulator’s standpoint, their role was to reduce as much barriers as possible for solar to enter Singapore’s market. The Energy Market Authority reduced the number of days from 27 to 7 days to join the power grid locally. It also created a 1-stop PV information sharing website for people to exchange ideas and knowledge. To hedge the problem of solar intermittency affecting stability of power in Singapore, the Intermittent Generation Threshold (IGT) has been set. Basically, this implied the maximum amount of solar energy produced which does not incur additional cost to carry on the existing system. The IGT is now 600MWp (previously 350MWp).
The Future of PV
Due to the unique constraint of land area in Singapore, there needs to be innovations in the usage of solar PV as an energy source. These are already present and are in stages of testing and development, including: floating PV panels (5kWh by Phoenix Solar); Pulau Semakau as a PV testbed as currently diesel is being used to generate power; and Building Integrated PVs (BIPVs) whereby solar panels are placed vertically on buildings like windows. However, some challenges like time-sensitivity of BIPVs and high installation costs remain to be resolved.
Without subsidies from the government, solar companies need to think of ways to build business models which will thrive in an island with a small land area, in order to propel a faster growth of the solar industry here.