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The US will be the largest solar market in the world in 2016, according to industry stalwart Jigar Shah.
In an interview with PV Tech, Shah said that the US had taken a slow and steady approach to developing its solar sector that was now poised to deliver benefits at home and abroad.
“The US market will be the largest in the world in 2016. I believe that very strongly. Once that occurs I think that the reality of the global politics is that most emerging markets would rather copy the US than Europe,” he explained.
“Once the US proves that its model works by becoming the largest market in the world in 2016, I think you will see more than 30 major emerging markets rush to copy the US model which will give solar a huge boost by 2020,” predicted Shah.
"The US market deliberately played a slow and steady wins the race strategy. Our goal in the US was not to artificially inflate solar through feed-in tariffs but to gently educate the banking sector on why they should be investing in solar. That process probably took five years longer than the feed-in tariff strategy but my sense is that today we’re seeing the product of this broad education that we were able to accomplish in the US," said Shah.
“When you think about the US model, what we’re doing is figuring out how to correctly price the risk of very small projects. Most people like the European Investment Bank, know how to underwrite billion dollar projects in Africa and India and other places, but they have a hard time underwriting 1000 US$1 million projects, which is the same US$1 billion. That’s what we have proven in the US. We’ve figured that through a yield co you can accelerate a portfolio of those 1000 US$1 million projects,” he said.
With yield cos gaining traction in the US Shah believes it only a matter of time before they begin to make an impact in more markets.
“The yield co has already been done in London as well and I think we’ll see yield cos going public in Singapore and Mumbai and other stock markets around the world. There’s certainly no lack of ability to replicate the model, the question is can you feed the beast? Once the US is the largest market in the world, people will have the confidence that you can find the projects to make this market work. You can’t sustain the costs of structuring this model unless you have enough projects to invest in,” he warned.
Jigar Shah will be speaking at the Next Generation Solar PV Finance event in New York on 29 September, organised by PV Tech’s publisher Solar Media.