PV Talk: Emerging markets in 2015 with IHS

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Last year saw a number of emerging solar markets begin to fulfil their potential, setting up some promising prospects for 2015. Josefin Berg, senior solar analyst at market research firm, IHS, discusses the emerging-market highlights of 2014 and what to expect in 2015.

Josefin Berg, senior solar analyst with IHS: Chile, Jordan, the Philippines and Honduras will be among the pick of the emerging solar markets in 2015. Image: IHS.

Which were some of the emerging-market star performers in 2014?
There were some very positive developments last year. We saw South Africa really moving ahead quickly, ahead of time; projects that were scheduled to come online in 2015 were commissioned already in 2014. Now however that’s going to impact their growth in 2015, so we might see a slight drop [in completions] in 2015.

Jasper PV project completed in South Africa last year. South Africa was one of 2014's star performers, but

Another market we saw take off is Chile. It’s another of these countries that people have been looking at and talking about for several years, and wondering when it’s going to take off. And after SunEdison installed its first project in 2013, we’ve seen more and more projects taking off there. Chile will definitely be for 2015 a very strong market. We think it could install up to 800MW, so by the end of 2015 it could have 1GW. But this is the beginning of the year – projects could go faster or slow.

If we’re looking at the new markets, we saw some very positive indications from Jordan, which finally closed financing for some of the projects that have been in the pipeline for a while. We think Jordan could install up to 200MW this year.

And Egypt in December awarded feed-in tariff contracts to 2GW of projects. There will be a lot of hurdles for these projects to be deployed, but it definitely raises our outlook for Egypt and we’re looking into that now to see how we should assess it – whether it could go like what we’ve seen in South Africa, or if there will be a lot of hurdles. They’ve awarded the projects, but they still have to go through the whole processing of PPAs, and it could be like Jordan where it’s been a very cumbersome process to get projects ready to build.

Then of course Brazil and its solar auction has been very positive news for emerging markets. Brazil has been one of these markets that we feel has to take off at some point. The policy hasn’t been there; we’ve seen the pipeline build up, but in Brazil wind has been the strong renewable technology. So coming out with a solar-specific auction, that’s very positive for Brazil.

Where else do you expect to see breakthroughs in 2015?
Our 2015 predictions paper last week highlighted the Philippines. We’ve forecasted over 200MW for the Philippines this year, but in a high-case scenario it could go up to 500MW this year. We’re still assessing how much is going to be installed until the feed-in tariff (FiT) cut expected in March, and then exactly what the FiT is going to be after that. But there are projects being built outside the FiT in the Philippines, so that’s definitely a market to look at.

And also in Honduras we saw projects signing PPAs last year with the regulator. They had a plan to install 300MW in Honduras, but they’ve oversubscribed in terms of the PPAs they’ve signed. And we’ve seen already projects starting construction; SunEdison has just received finance for a project, Scatec Solar is also starting a big project there.

What are the main factors propelling these markets forward?
The first and most important thing in most markets is policy. Policy has developed; policy-makers are allowing private project development to go ahead. And they’re encouraging solar technology – that’s what’s making the difference in these markets, encouraging and supporting. There’s a lot of talk about non-subsidised solar and that solar can stand on its own two feet now. But whatever the power technology you’re talking about, it needs to be anchored in policy and regulation, and ideally have some kind of support.

What about the laggards? A number of places get talked up but haven’t delivered yet – Saudi, Turkey and Mexico to name a few. What’s holding them back?
On Saudi, it’s coming back to what regulators and policy makers actually put into place; they announced a very ambitious target, but then the evolution from that announcement has been very slow. We’re just going to have to see what impact current oil prices have on their economy and on their renewables ambitions. And Saudi isn’t really in a hurry to deploy renewables; it’s not like in Jordan or the Philippines – in Jordan and Philippines they have a real concrete need for power, which has pushed policy makers to support PV as a technology that can be quite quickly deployed.

As for the other markets where we see uncertainty, Brazil has made huge leap forward by holding solar auctions. Now the second step is for these projects to move forward is to organise financing and then have a realistic plan for installation. There are still a lot of question marks in Brazil regarding local content and the whole financing situation.

In Turkey it’s also about policy. They awarded the first part of licences last year, and they’re set to award the remaining capacity this year – auctions are coming up at the end of January. What we’ve seen from the first round of projects last year is that it’s been a slow process from awarding the projects to getting contracts and details implemented; the bureaucracy and is holding things back.

Mexico is one of the markets that’s more complicated. Financing is a big problem because a lot of the projects there are depending on spot prices and they’re competing with wind projects that are being sold at similar sites. Solar is still struggling to find its place in the Mexican market.

Does sub-Saharan Africa, outside of South Africa, offer much potential this year?
There are a lot of announcements in Africa of very big projects ranging from 100MW up to 1GW of projects, and then a couple of memoranda of understanding, but nothing much beyond that. There have been projects that have been cancelled – Zimbabwe had a big pipeline, but the projects were cancelled or postponed indefinitely. That’s very likely to happen in other markets. There will be some countries where projects are installed, but it will be on an individual basis and not at a programme level or as a general trend. Any power project you want to pursue in the region is going to be quite a challenge.

Are we likely to see any surprises this year in terms of new markets opening up?
We'll have to see what’s happening in the rest of Latin America. Until now it’s been quite concentrated in a few countries. Overall in the rest of Latin America, there are a lot of other power generation sources in the region [for solar compete against]. But it would be interesting to see which of those countries open up – maybe just even a small programme or tender.

Also Southeast Asia is one of those regions people expected a lot from, but aside from Thailand it hasn’t delivered that much over the past years. Now we’re seeing the Philippines taking off and we’ll have to see what the other countries in the region are willing or able to move on and accelerate the success of their solar programmes.

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