How dependent are solar producers on federal tax credits and state renewable energy policies? During today's OnPoint, Yann Brandt, regional head of the Americas at Conergy, discusses his company's growth projections amid industry volatility and regulatory uncertainty. He also talks about the international markets that are showing the greatest potential for expansion of solar.
Monica Trauzzi: Hello and welcome to On Point. With me today is Yann Brandt, regional head of Americas at Conergy. Yann, thanks for coming on the show.
Yann Brandt: It's a pleasure to be here.
Monica Trauzzi: Yann, your company is involved in a series of solar projects, both international and here in the United States. With the extension of federal solar tax credits, what are your projections for growth here in the United States in the near term?
Yann Brandt: Well the United States is going to be one of the largest markets for Conergy, as well as globally. Outside of China, the United States is forecasting tremendous growth. You're looking at over $30 billion of investments this year, which will be a marquee year at over 16 gigawatts of power installed. That will settle in at somewhere over $20 billion installed for the next five years, but the extension really means seven years of certainty for us.
Monica Trauzzi: When we last spoke just about a year ago, you gave the background on how your company went from being insolvent to turning a profit. There's still volatility in the space. How do bankruptcy filings by other companies impact your business?
Yann Brandt: The bankruptcy filings are really something that people look at and are worried about, but as more people are educated about the space, as more dollars flow into the spaces, people are getting more comfortable.
When you look at corporations, sometimes bad decisions lead to bad results, but really what's happening now is Conergy, for example, in the last year has raised over $250 million for project capital. By having these SPs, more and more comfort is created in the banking sector.
Monica Trauzzi: How dependent though do you think the industry's expansion and growth is on state and federal policies that support renewables or, in some cases, mandate renewables?
Yann Brandt: The federal policy is pretty much set now. The five-year extension of the tax credit gives us the seven years of certainty. On a state level we have to separate the politics from the policy. The voters are advocating for solar. Just in a recent poll of independents in swing states, 27 percent of very difficult voters to get off the fence said that they would back a Republican candidate that had vocal support for solar.
So this is no longer an issue about Republican or Democrat. This is about getting independents to chime in, and independents were saying they want more solar.
Monica Trauzzi: How has the Supreme Court stay of the Clean Power Plan and many states halting their planning as a result impacted projects that you have in the pipeline and also your company's projections for growth?
Yann Brandt: So the solar industry will see little impact of this. There's a growth aspect in the long term that Clean Power Plan could create, but solar's competing at an avoided cost level. Just this year we'll do somewhere around 100 megawatts in North Carolina, and that is through a standard offered contract at avoided costs.
So what utilities are seeing now is that they can add solar to their portfolio with no impact to consumer costs and actually hedging on the long-term cost volatility of fuels because solar's the avoided cost.
Monica Trauzzi: So when these tax credits phase out, you think the industry will be in a strong position? Will no longer require any type of assistance?
Yann Brandt: We just got through a two-year fight to make sure that our tax credits were extended. I'm pretty certain we have a nice phaseout plan now including with a commenced construction clause which gives us that additional two-year buffer. That's something that we'll have to look at at the end of the policy.
What we do know is that by 2020 over 400,000 people will be working in solar in the United States, and that is a tremendous job growth. It's up 100 percent from where we are today. I'm sure policymakers will do the right thing at the time depending on what the economics look like.
Monica Trauzzi: How does your company continue to define itself against your competitors? This is a space that is growing rapidly and becoming more and more competitive. How do you define yourselves?
Yann Brandt: So at the core of it we do it by making sure that we're executing on what we're promising, but on the other hand, next to telling developers what we expect from them, but also ensuring that we're bringing the right amount of capital to the table.
But we're also entering into new markets, whether it's wholesale markets in PJM. We're becoming a market participant. We're looking at other wholesale markets around the country. The corporations are getting involved in their renewable energy purchases when they have access to it. So free market energy origination is a big part of our strategy.
Monica Trauzzi: In a recent report the Department of Energy projected a 15 percent growth rate in solar energy jobs this year. What are your company's employment projections in the U.S.?
Yann Brandt: So we'll have direct and indirect employment growth. So we'll probably grow by about 20 percent this year through our three main offices spread around the country, but we have a huge amount of indirect job growth because we do outsource a lot of our construction. We work with outside engineers, outside banking, legal partners. So the indirect job growth is exponential.
Monica Trauzzi: You also have many different international plays happening. What are the biggest international growth markets for you?
Yann Brandt: So this year in the Philippines we're the largest markets, but Southeast Asia is also growing. Australia is showing nice signs of growth, and the Japan market is at the tail end of its peak but still a very large market.
Europe, unfortunately, and they've had their peak years, is on the decline. So a lot of the European focus is now shifting into Africa and Middle East.
Monica Trauzzi: Where is solar PV most cost competitive?
Yann Brandt: The question is where isn't it cost competitive? When you look at the 20-year advantages of solar energy, it's competitive in many places. Some countries where all energy is subsidized, like the U.S., it's difficult to compare apples to apples, but from a cost perspective, whether it's Europe or Southeast Asia you're seeing strong benefits.
Latin America is a very large growth market for us.
Monica Trauzzi: We'll end it there. Thank you for coming on the show. Nice to have you here.
Yann Brandt: Thank you so much, Monica.
Monica Trauzzi: Thanks for watching. We'll see you back here tomorrow.
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