Intersolar Europe 2017 had a lot to offer its attendees. With 8 halls full of exhibitors, a wander round the exhibition uncovered the newest innovations and the biggest brands, industry talks and even live Bavarian music. Furthermore, the extensive conference program showcased the ideas and trends shaping the solar industry today. ecoligo’s founders Martin Baart and Markus Schwaninger, both speakers at the event, share their insights.
The time of subsidies is over
Many in the solar industry realise they must enter markets where sustainable subsidy-free business models are possible. In the past, the industry has been running from one market hype to another, based on where subsidized feed-in-tariffs have been highest. After focusing on the German market for too long, many German companies are now looking for opportunities in foreign markets.
For example, German market leader SMA Solar Technology AG has increased its share of revenues in markets abroad from 56.3% in 2012 to 87.9% in 2016. The company is demonstrating the viability of subsidy-free models in these new markets, which many other companies stand to profit from.
A subsidy-free business model is one in which the business model itself is profitable and does not need to be supported by the state. For example, ecoligo’s business model recovers all costs through selling electricity to the off-taker, due to the high prices of grid electricity. On the other hand, in the vast majority of sub-Saharan Africa, the money collected by the off-taker does not account for the money expended on generating and distributing the electricity.
Emerging markets are becoming a hotspot for solar
Emerging markets are becoming more and more of a hotspot for solar, not only for off-grid technologies and niche products but as a mass market. India is booming (delegations attended Intersolar and there were many related side-events) but Africa is also attracting increased attention from European companies. Therefore, it is only logical that Solar Power Europe – the association of the European Solar Industry – organized an event at Intersolar to address the Sub-Saharan African market in specific.
No space for traditional finance
The Sub-Saharan Finance Masterclass, which took place on Thursday 1st June, focused on the main barrier in this market: finance. Interestingly, not a single speaker talked about traditional finance. Markus was the second speaker of this event and discussed ‘Raising capital the alternative way’, addressing the finance gap and crowdinvesting as a solution.
Drawing from industry case studies and ecoligo’s own projects, Markus compared the finance situations in Africa and the West and outlined success factors for crowdinvesting campaigns, which can be seen as both emotional and rational. For example, high quality informational material that makes the project tangible increases crowdfinancing success. However, employing stringent and transparent risk mitigation measures is the most crucial.
Risk mitigation measures can be technical, such as working with an experienced EPC, or can refer to the business model or energy off-taker, such as working in EUR to avoid currency risks. The complexity involved in working in these markets contributes to the unwillingness of traditional financiers to enter: there are often large differences between their expectations, which are based on financing traditional energy sources, and the reality of financing renewable energy solutions.
The event even featured blockchain based financing structures, demonstrated by TheSunExchange founder Abraham Cambridge. It is clear that forward-thinking, alternative financing methods are leading the way in these markets. As a more viable solution than traditional finance, this is a good sign for the acceleration of renewable energies in sub-Saharan Africa. Presentations from the workshop are available here.
Crowdinvesting is heading into the mainstream
The topic of crowdinvesting itself was also covered during the Intersolar conference. On Wednesday, Markus spoke at a session on “Green Bonds & Crowdfunding – The Financial Future?“. Typically, green bonds are used to finance utility-scale and multimillion USD solar projects, while crowdfinancing is more suited to financing projects for commercial and industrial (C&I) customers. Once again, classical finance was shown to be unsuitable for C&I projects, whereas crowdinvesting has become somewhat mainstream in this regard.
Digitalisation: increasing efficiency, decreasing risk
It also was interesting to see that more and more solar companies are relying on digitalisation to improve their businesses. Increasingly sophisticated software tools are becoming available for companies in the solar space to use, further increasing the accuracy of energy generation and cost projections. Operationally, monitoring solutions are also following the global trend in becoming cloud-based services. They have open interfaces via API’s and are highly scalable.
More importantly, digitalisation can help to reduce risk. In emerging markets and when the customer requires long term PPA’s, there is risk in the off-taker assessment as well as long term prediction of the PPA performance. Digitalisation helps to automate the due diligence of off-takers and automate the tracking of monthly PPA payments – increasing transparency and making PPA’s more affordable.
Markus Schwaninger presented at the ‘Green Bonds and Crowdfunding – The Financial Future?’ session and the Sub-Saharan Finance Masterclass. Martin Baart gave a presentation in the ‘Off-Grid: Innovative Systems and Finance’ workshop. Thanks to the Berlin Brandenburg Energy Network for hosting ecoligo at their booth.
ecoligo is a solar utility that provides low-cost solar energy to businesses in emerging markets. By financing the solar systems through a crowdinvesting platform, ecoligo closes the finance gap that prevents these projects from being realised. Investments on the ecoligo finance platform not only provide attractive returns, but save CO2 and support the local economy. Find out more at ecoligo.com.
Photo: © Solar Promotion GmbH
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