Today is the first day I´m blogging for Cleantechies and in fact, the first day I´ve ever blogged on my own so anybody reading this with a highly developed sense of blogger-etiquette please be patient while I learn which fork to use.
I´ve been living in Barcelona for 5 years now and for the last 2 and a half years after graduating from IESE Business School, I have been working with a renewable energy firm based in Barcelona called Blue Green Capital. We are solar developers working in Spain, France, Israel and other feed-in tariff markets. While we may not drive a pick-up truck and wear aviator sunglasses, we often have muddy shoes and drink a lot of beer, both of which are useful social lubricants in our line of business.
So after completing and exiting our first two projects in Spain with a US trade investor and a Spanish engineering firm, we´ve been dedicating most of our resources to building up a solar portfolio. The feed-in tariff system in Spain has been enormously lucrative in the last 2 years, hovering around €0,40 to €0,44/kWh. Many promoters and players, ourselves included, took advantage of the juicy subsidy to close on projects whose IRRs were 12% or more. But as could be expected, the Spanish government got nervous at underwriting solar projects at such a high cost, and radically revised the subsidy system downward; attaching a performance bond of €500/kW for all new ground-mounted systems in addition to pushing the feed-in tariff to a more-manageable €,32.
Our analysis; that´s the way it´s got to be. Solar energy by definition should be cheap, competitive, and flexible. Maintaining high IRRs on projects meant that every participant in the value chain – module manufacturers, EPC providers, structure manufacturers, promoters – all inflated their margins, resulting in high cost, bulky, solar systems with large-scale incentive for speculation. Pushing project remuneration down means that serious participants only will be playing ball. We look forward to seeing corresponding drops in panel prices and more realistic return expectations, culminating someday in projects that reach grid parity.
Over the coming weeks and months I hope to be updating this blog with some on-the-ground impressions as a Montanan in Europe, working in the renewable space. These impressions may run the gauntlet from the inane (“aluminum structure prices at €0,25/Watt – no way.”) to the public domain (“12,5% unemployment expected by 2009 – ouch”). Feel free to contact me or BG Capital for any specific questions or proposals.