Employees of SunPower Israel are currently in a crazy race against the clock. Like many other solar power developers, they have 90 days to complete the financial closing for the projects they seek to construct. The ultimatum was set by the Public Utility Authority Electricity, when it decided to cut the tariff for medium-size solar installations by 25%, from NIS 1.37 per kw/h, to NIS 1.02. A developer who wishes to benefit from the old tariff will have to reach financial closing within 90 days of applying for a tariff commitment from the Authority. Failure to meet the ultimatum is liable to put an end to the entire project, because it will lose its place in the queue for the new tariff as well.
A difficult sanction
In SunPower's case, it is a matter of many projects, nine medium-size solar fields that the company seeks to construct in the south of Israel. "This is a difficult sanction, one which doesn't exist in other places around the world," says Uri Zror, business development and sales manager at SunPower Corp. Israel. "Constructing a solar field is an infrastructure project in every respect, and is quite unlike setting up small rooftop solar systems. In the course of the process, the developer has to obtain permits from many entities, about 25 different authorities, but on the whole we encounter a cooperative attitude, and we believe that we will manage to abide by the timetable.
"Looking ahead at the future of the industry, there's no doubt that 2013 will see a trend of consolidation and a shrinking number of players in the market, among other things because of those that will not succeed in meeting the closure demands."
"Regulatory changes have taken place in almost every country," says SunPower's European Systems Sales Director Mario Riello. "What's important is that changes should be made in consultation with the developers, and not unilaterally. In Britain, for example, they unilaterally cut tariffs by 50%, and the developers won't go back there."
Last year, SunPower was taken over by French energy giant Total SA, at a valuation of $2.3 billion. The Californian company is reckoned to be the fifth largest solar panel maker in the world, and a leader in developing new and inspiring technologies. In 2014, SunPower plans to launch the first solar powered aircraft capable of flying at night. Another project at an advanced stage of development is to produce a solar-powered ship.
Israel is one of only three countries in the world in which the company is involved in solar field construction projects. There are 14 such projects in Israel, of which five are huge plants planned for the Gaza border area, the Negev, and the Arava.
According to Zror, there is hardly any difference between the US company and Israeli companies as far as their contribution to the economy is concerned. "In each of our projects at least 200 people are employed from the development stage to commissioning, with all the planning, consultancy, and construction work being done by Israeli subcontractors, apart from a skeleton staff of project managers and engineers from the company. All the solar panels themselves are imported, because there is no local production. The know-how and experience in setting up solar fields has to be foreign, because only one solar field has been set up in Israel to date. No bank will give finance to a developer who seeks to construct a $50 million solar field without foreign know-how."
A great deal of criticism has been leveled in the government at the cost of the subsidized power tariffs received by the solar power producers. Riello takes the view that their contribution to the local economy should also be taken into account. "In a country like Italy, for example, PV is considered a vital industry, because of the certainty that it provides for the lender banks. The industry already accounts for between 1% and 2% of GDP. Even in a country like Greece, they are encouraging this activity today, despite all the difficulties."
Still optimistic
SunPower's main activity remains solar panel production. This is a market that has been swept by cheap mass production in China, but Riello is still optimistic. "You can beat the market in two ways," he says. "Either you can be a cost leader, building in large volumes, or you can be an efficiency leader, and lead on technology. Our latest panel is considered to be the most efficient in the world, with an efficiency ratio of over 20%. We also guarantee that the panels will continue to work after 25 years and provide 80% of their original output. This is a commitment based on our experience in making panels since 1985."
Published by Globes [online], Israel business news - www.globes-online.com - on January 25, 2012
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