L R AS Published on Tuesday 7 April 2020 - n° 316 - Categories:PV Watch
A look at a sketch of a PV landscape from containment
Containment and the situation in many countries.
France, Italy, Spain, Germany-Holland, USA, China
Two deep-seated tendencies of perception are opposed:
The "as before", the break
Little by little, the photovoltaic landscape is emerging from a dense fog, but it is not yet clear.
Containment dominates in many countries
In FranceAs usual, there is little information on the PV sector.
The Renewable Energies Union indicates that certain links in the value chain (equipment manufacturers, project developers in particular) are facing major difficulties. Some activities have been at a standstill since the start of containment. The president of the solar part of the union says that the beginning of the crisis is being felt by French operators. Current challenges, he said, include the difficulty of using the services of online notaries and finding architects capable of working on plans outside their offices. He also urged the state to go further and cut red tape. He said industry was used to administrative bottlenecks, but these could become "unacceptable" at a time when France needs to restart its renewable energy market.
Moreover, the union details the first decisions taken by the Ministry of Ecological Transition such as fixed deadlines granted to producers, adjustment of the calendar of the next calls for tenders, sending of dematerialized invoices to EDF OA, maintaining the tariff for three months. SER is already making its "first proposals for adjustment measures for the renewable energy sectors".
In its press release of 3 April, the union underlines that "the minister recalled that the health crisis we are going through should not in any way make us renounce the ambitious objectives in terms of development of renewable energies.The results of the recent calls for tenders confirm the very high competitiveness of the different sectors.»
As for knowing the impact of the shutdown of photovoltaic activities, the situation of the companies in the field or in the design offices, nothing on the site or in statements. We have remained in the pre-crisis phase and in the continuation of the previous trend. We can console ourselves with the calendar of upcoming events!
For their part, "the ENERPLAN team and the union's elected representativesare mobilised to serve the French solar professionals.The ENERPLAN team and the union's elected representatives are mobilised to help French solar energy professionals, so that the sector can get through the health crisis caused by the coronavirus epidemic as well as possible, and to optimise the revival of the activity when possible."There is no information on the situation on the building sites, on future developments, on the indispensable adaptations. On the other hand, a site guide is available on the site (since 3 April); the results of the calls for tender (list reserved for union members) put online on 1 April; the postponement and modification of the online specifications from CRE (31 March); and the publication in the Official Journal (31 March) of the freeze on the purchase price in the second quarter, and the operation of the solidarity fund.
In ItalyIn the context of the epidemic, where containment has been severe since 10 March, professionals, still in the pre-crisis phase, are asking the government to minimise the epidemic (it is true that there are some tens of thousands of deaths for a population of 60 million people). They would like power plant promoters to be able to obtain building permits from regulatory bodies and a guarantee from financial institutions. However, the landscape has changed with the collapse of oil prices, making the cost of producing electricity from gas-fired power plants much cheaper. This weakens the attractiveness of solar or wind power plants. As a result, power purchase agreements (PPAs) are becoming less attractive and more risky. Uncertainty prevails because we do not know the price of oil in one or two years' time and especially the extent of the recession, which will lead to a decrease in demand for electricity. The demand for electricity could fall by 5% to 13%, making the construction of renewable energy plants less necessary in the immediate future. Most importantly, investor perceptions are beginning to change.
Up to the last fortnight in SpainThere was no strict confinement. Companies were able to work to a certain extent, while respecting safety precautions. Now, all construction sites are stopped. However, it seems that maintenance and repair work can continue.
In Germany and HollandThe worksites appear to be little disturbed. Roof installations continue, with only two people on the same site and with distance measures. However, there is a lack of teams, particularly from Eastern Europe: they have returned to their region of origin and are forbidden to return to Germany. Equipment such as counters are beginning to run out. This is preventing network operators from installing them and thus completing the sites. Companies continue to take orders, most often by phone or internet, because visits are spaced out or cancelled. One company even specifies that "orders arrive every day". Nevertheless, the effects of thecoronaviruses on residential installations are difficult to predict at the moment. Potential customers fear for the safety and fulfilment of their orders. However, if installers can continue to work as they do at present until the summer, there would be little disruption to the profession.
In the United StatesA survey of various professionals in the sector revealed their high level of confidence. Most manufacturers continue to produce panels. So far, the installation activity has been modestly impacted by the pandemic. Installers are getting online bookings. Respondents estimate that if the outbreak is contained within 2-3 months, there will indeed be a weakness in activity in the second quarter, but that a catch-up will take place in the second half of the year, allowing a volume of installations in 2020 at least equal to that of 2019. Others estimate that a drop from 2 GW to 5 GW is possible in large power plants. The installations planned for 2020 would be completed in 2021.
In ChinaThe business is back on track. A large number of manufacturers are working at full capacity to supply late orders. However, there is great concern about the volume of future demand. For the national market, the installations for the first two months only reached 4 GW, which is explained by the New Year's celebrations in January, then by the confinement in February. The prospects for installations vary according to analysts. Some (AECEA) estimate that they will be down in 2020 compared to the 30 GW commissioned in 2019. Others consider that the government will do everything to save its installers and that the fall in the price of panels will increasingly allow the installation of power stations with a cost price of electricity below that of the network. They estimate that installations will reach 40 to 45 GW this year.
Chinese manufacturers are in a much greater perplexity. Although the domestic market will be at least comparable to that of last year, the confinement in a large number of regions of the world and especially in the large client countries will lead to a serious crisis of overproduction. Demand will weaken. New production facilities will increase the available volume. Already, the prices noted by three research organisations, which we are passing on, are falling this week. The trend will continue and perhaps accelerate at least during the month of April.
Two deep-seated trends in perception are opposed
The "as before".
Beyond this overview of the photovoltaic activity in some countries, there are two profound trends in perception. There is the one that believes that the four previous epidemics that have occurred over the last twenty years have changed nothing in the world organisation. The proponents of this orientation believe that the coronavirus will not change anything again and that the same habits and ways of thinking will continue to prevail. They keep the same language, the same arguments, and therefore the same strategy (defending their own turf). The result of this current of thought is that the forecasts made at the beginning of the year for global facilities will be broadly respected, with a trough in activity in the second quarter, which will be filled in the second half of the year. In 2021, we will return to the old trend. The world will be in the continuity of its past: an oil that will go back to its $60 a barrel trend, the attraction of renewable energies, an identical social organisation, life will resume as before.
The other trend is betting on a pandemic that is more difficult to eradicate, and with possibilities of resurgence. This will prevent a return to business as usual. Containment will be longer and more general throughout the planet; habits will be changed by the obligation to remain confined; oil will remain permanently low because factories will be out of action for longer as will car traffic. The social consequences will be considerable because a certain part of the population will no longer work or have less income. The reduction in the French and global standard of living will be significant. Some will demand work and wages, with the political consequences that will follow. Because of cheap oil, renewable energies may not be as easily established in 2021 as in 2019. Energy purchase contracts may then no longer be concluded. RE would no longer be the priority in a world of primary needs for food and survival.
The two alternatives are not antinomic, but the proportion of one or the other in the final mix is as yet unknown.