l'Actualité du Solaire

Two cases emerge: the situation of developers of large power plants and roof installers: large power plants; residential roofs; professional roofs

In France, there is still little information on the activities of installers and developers.

Project funding also distinguishes between the two categories

Negotiations on purchase contracts are continuing but are taking a long time to complete.

The text

Over time, we have a better perception of the situation of photovoltaic professionals.

Two cases emerge: the situation of developers of large power plants and roof installers.

As usual, there is no information on the situation of French companies. To get an idea, you have to go through the United States. There, a totally different situation appears between the manufacturers of large power plants and the installers on the roofs.

Large power plants

It seems that activity was not really disturbed in the construction of large power stations: it is possible to establish a physical distance between the workers. Supplies were roughly respected. There was no strict confinement, which meant that the construction sites were not stopped. Moreover, the developers have a large order book because the commissioning of power stations over 100 MW will triple between 2019 and 2021 (going from 11 to 32), partly thanks to the tax credit.This is partly due to the federal tax credit, which makes it necessary to keep to the timetable, partly due to the need for companies to obtain dedicated electricity at a reduced price (within the framework of purchase contracts).

Residential roofs

Any other is the situation of rooftop installations, whether residential or professional. Here, the physical distance is more difficult to establish on sites that are often located in urban areas. Installers perceive that their order books are becoming increasingly sparse. Private individuals do not want to be in physical contact with salespeople, which means that they have to negotiate by telephone or internet. This slows down explanations, negotiations and especially the signing of contracts. It seems that the flow of residential orders has returned to almost zero during the pandemic in the United States. This has forced a number of small installers to temporarily close down their activity. The two largest American residential roof installers (Sunrun and SunPower) launched an exceptional customer recruitment campaign: during the first six months of the contract, there were no payments. The promoters hope that this period will be long enough for the pandemic to be over and for households to see their financial situation improve. These unprecedented measures reflect the very difficult situation of residential developers and installers, without it being possible to indicate whether the number of contracts signed is stimulated by these measures.

Professional roofs

This is also the case for installations on the roofs of commercial or industrial companies. Here, activities are slowed down; a large number of employees have been made redundant. Companies, before a sharp drop in their activity and therefore in their energy needs, have difficulty determining their future electricity requirements. The managers have their minds elsewhere; they are concerned about the survival of their companies. Not knowing how much energy they will need, they postpone any discussion about their long-term electricity supply until later.

In France, there is still little information on the activities of installers and developers.

In France, the trade union bodies do not provide information on developments in the sector or their members. Is this silence indicative of a favourable situation that needs to be hidden? Is it an indication of an accelerating deterioration in the situation that must be concealed here too to avoid alerting suppliers to the present reality of their customers?

It can be estimated that the winners of the calls for tenders were obliged in some cases or in a large number of cases to interrupt their construction sites. Nevertheless, they benefit from the initial agreement that guarantees them against a fluctuating energy price. The two-month delay (between mid-March and mid-May) will be made up in the second half of the year.

The big installers such as Voltalia or Neoen are happy to announce that the pandemic has no "notable effect" on the operation of the power stations they operate. Voltalia acknowledges that "the The pace of certain power plant construction is nevertheless, in some countries, slowed down or even temporarily halted, without affecting the financial targets. However, the health and economic crisis is giving rise to new risks that make the environment less predictable. The main risks relate to the ability to carry out major ongoing and future power plant construction projects without delay, the ability of customers (mainly in development and project construction sales) to make progress in their decision-making processes, and possibly currency fluctuations.»

Project financing also distinguishes between the two categories

Since we cannot rely on French examples, the American company Sustainable Capital Finance, backed by the No. 1 developer NextEra Energy, estimates that the delay in obtaining permits and in construction could have an impact of 10% to 30% on the order portfolio. To this would be added the delay in placing orders from professional customers, as managers will first be busy relaunching their business. They may not need as much energy as before because of teleworking. They may also not be able to borrow. Initially, the business customer base may be reduced.

There is conflicting information in this respect. Some say that banks have closed their counters to borrowers or are significantly increasing their profit margins. Others claim that the big banks (JP Morgan, Bank of America, ...) only serve large clients. They provide examples such as Engie which has just obtained a $1.6 billion loan to build 2 gigawatts. The No. 1 developer NextEra Energy says it has all the bank commitments to finance its vast construction programme in 2020.

In Europe, loan applications are still being processed. Investors with good cash flow should have no difficulty in obtaining financing, while developers with no financial clout will have difficulty obtaining loans.

Negotiations on purchase contracts are continuing but are taking a long time to complete.

In this context where large power plants are favoured over roof-top installations, the European law firm Fieldfisher claims that negotiations of power purchase agreements (PPAs) have already resumed with electricity users. However, the discussions have been extended to include recent events such as the impossibility of building, or the possibility of changing the amount of kilowatt-hours supplied in the event of major events. Buyers are also much more sensitive to prices, since the fall in demand has led to a collapse in prices on the European wholesale market, and this phenomenon could happen again. New clauses are therefore being introduced. Just saying that there are negotiations does not mean that PPA contracts are being signed. Probably the negotiators will wait to sign until the situation has cleared up, the volume used has stabilised, a price balance has occurred and finally the suppliers have a sufficient profit margin to build and operate in the long term. This means that the conclusion of the contract is postponed and thus the start of construction is delayed.

Even if the photovoltaic landscape has not stabilised, there is a differentiation between developers with good financial standing (including good cash flow), and those who have or will have the greatest difficulty in obtaining loans to realise their projects. The latter may be forced to sell assets or projects in order to finance themselves. As always, finance splits the good from the bad. Those who have the cash can get their projects off the ground. Investors with cash would then be in a position to buy the projects on sale on good terms; others have to convince third parties to lend them money, which wastes time negotiating and trying to convince, and energy that is not used to move forward. In this respect, there is always justice.