Solar interview on PV markets in Latin America with José Ma Llopis, Senior Vice President Project Business, IBC SOLAR AG

José Ma Llopis, Senior Vice President Project Business at BC SOLAR AG outlines the potential of solar PV in Latin America.

The solar interview focuses on application areas, grid integration, self-consumption, and financing in Chile.

 

 

José Ma Llopis: Latin America’s governments promote their own power generation projects, especially for solar and wind power.

 

 

 

Solar Server: Mr Llopis, when it comes to expanding solar power capacity, Latin America is expected to be the front runner this year with a growth rate of 35%. What are the reasons for the increased use of photovoltaics?

Llopis: The increasing demand for energy in Latin America along with the level of dependency on imported oil and gas prompted the governments to promote their own power generation projects, especially for solar and wind power. The new energy agenda of the Chilean government states, for example, that around 20 percent of the available power capacity should be provided by renewable energy by 2025.

As one of the fundamental pillars of the renewable energy mix, it goes without saying that photovoltaics also benefits from this expansion. Generally speaking, the drop in system prices has resulted in photovoltaics now becoming an interesting option for many politicians and decision-makers, as it is a very cost-effective way of generating power.

 

Solar Server: Which countries are driving the photovoltaics market in Latin America?

Llopis: Chile is currently the market with the largest potential for our project business in Latin America. The irradiation values are almost ideal in this country and there is a rising demand for energy. There is also traditionally a great dependency on imported fossil fuels. There are currently 5,700 MW of photovoltaic capacity in the pipeline that have already been approved by the Chilean government.

As far as distribution business is concerned -- in other words small and medium-sized PV plants -- other countries in South and Central America are also attractive – Mexico, Peru, Brazil and the Caribbean should be mentioned here in particular as this is where we are keeping an eye on development. Mexico, Peru and the Caribbean are already interesting project markets.

 

Solar Server: According to the figures from the Chilean centre for renewable energy (CER), Chile achieved an installed photovoltaic capacity of less than 200 megawatts at the end of April 2014. However, projects with an overall capacity of several gigawatts have been approved. What is the reason for this discrepancy and the slow expansion?

Llopis: Due to the lack of experience with photovoltaic projects, hardly any standardised financing models have been introduced in Chile up to now. The complicated grid connection, especially in the north of Chile, also makes it difficult to build photovoltaic power plants. To a certain extent, there is still also a lack of well-educated specialist technical staff for installation, O&M services and repair work.

Another very important reason is that the construction work involved in the projects is not subject to any deadlines. Photovoltaic plants are treated like normal power plants and are bound to extremely complex PPA structures (Power Purchase Agreement). The projects are for the most part also rather large and this means that it takes a relatively long time to implement and develop them.

 

Solar Server: Which application areas and economic sectors are photovoltaics in Chile particularly suited to?

Llopis: The mining industry in the North in particular is able to benefit from PV plants designed for industrial self-consumption due to its high energy requirements. The well-developed infrastructure makes the region particularly interesting for us and facilitates plant construction and maintenance. The retail trade and food processing sector are the ideal target customers in the urban environment with high energy consumption, while the agricultural industry is the main target customer in rural areas – self-consumption models are also used here.

However, there is still no political regulation for regulating access to grids. Photovoltaic power plants are in principle intended as electricity generation power plants that trade electricity via the electricity exchange as part of individual PPA agreements. We consider this to be the future for photovoltaics: A market without any funding in which photovoltaic power asserts itself against all other types of power generation. For me personally, this is most definitely a revolution in the industry!

 

Solar Server: Are there any differences compared to the technical conditions of other markets, e.g. for the power grids?

Llopis: The power grid in Chile is divided into a northern part and a southern part. The North with its large mines has an independent supply network and generates more than 90% of its power from fossil fuels. The South has a high percentage of renewable energy sources, primarily hydro power. The Chilean government has been trying to achieve a diverse energy mix for many years.

However, it is a huge challenge to find suitable grid connection points for distributed power and power produced using renewable energy sources – this is mainly the case in the northern power network where the mines, the greatest potential consumers of solar power, are located. It is also important to remember that Chile is a country where many strong earthquakes occur. A nuclear solution is therefore not really an option.

 

Solar Server: How are photovoltaic projects financed in Chile?

Llopis: Important local investors are family funds that invest in the construction of renewable energy power plants and combined-cycle power stations in the multi-megawatt class. However, direct investments from international companies also play a huge role in Chile. It is relatively easy to make these investments as there are hardly any government restrictions. It is now important to find standardised financing models that offer investors security.

 

Solar Server: IBC SOLAR recently opened a sales office in Santiago de Chile and cooperates with the local energy service provider IMELSA. What is the significance of the partnerships with local companies?

Llopis: Our business model is always tailored to the specific conditions in a particular country – this must include local partnerships in the project business with developers, building contractors or investors and in commercial trade with local installers and distributors. You generally need to have plenty of patience when it comes to entering a market, the necessary staff resources to make your presence felt in the long-term and the ability to understand the country's business culture. Relationship management with partners and customers is absolutely essential for developing trusting collaborations which form the foundation for a long-term market presence.

 

Interview conducted by Solar Server’s Editor in Chief, Rolf Hug