Author: Jason Deign, Solarplaza
Hamburg, Germany-based Conergy, one of the biggest downstream solar companies in the world, is streamlining its entry into new markets with a standardised set-up approach. The approach, which involves developing local contacts and pilots before full market entry, enabled the company to go from a market assessment of the Philippines to building the country’s largest PV plant within just two years. Conergy has since gone on to become the biggest developer in the Philippine solar market, with 274 MW of projects, said Alexander Gorski, chief development officer.
“Globally standardised business processes, a proper risk assessment and management, and a long-time network of trusted regional and local partners are key success factors for a fast, risk controlled and successful market entry,” he said. The company pursued a similar strategy for entry into the UK solar market, one of the largest in Europe, where Conergy is also now a leading developer.
As much as speed is important, so too are proper market and risk assessments in avoiding big problems afterwards.
“We prepared our market entry in 2012, started to develop a large 100 MW project pipeline in 2013, scaled up our business in 2014, and successfully executed, by the end of 2015, a cumulative 350 MW of projects,” Gorski said. Using a standardised approach, Conergy can assess the potential of a new market within 12 to 15 months and then scale up to become a significant player within six months to a year. However, said Gorski: “As much as speed is important, so too are proper market and risk assessments in avoiding big problems afterwards.”
Conergy uses a range of globally standardised tools for market and risk assessment. These include a scorecard of market attractiveness and risk, covering areas such as grid-parity roadmaps, revenue streams, regulation, grid feasibility, project development hurdles, access to finance, currency risks and hedging costs.
“Without a very structured and proper assessment of all relevant aspects at the beginning, upcoming risks can destroy the whole case later on,” Gorski noted. Conergy's strategy also includes a standardised approach to securing finance for emerging markets. Most often this is through the involvement of international development banks such as KfW of Germany, the Overseas Private Investment Corporation, the International Finance Corporation, or the African or Asian Development Banks. Equity either comes from Conergy, depending on the market, or from external investors that often have a strong regional focus.
In 2015, renewable energy investors have deployed around USD$600 million of capital through Conergy's global downstream platform.
In the Philippines last year, for example, 117 MW of Conergy projects were structured and financed with Macquarie as a lead lender and Thomas Lloyd as the equity investor. Both are long-term Conergy business partners and used the solar developer as engineering, procurement and construction provider.
“Conergy provided all necessary guarantees, as well as vendor financing, and will ensure excellent technical operations and maintenance service throughout the project lifetime,” said Gorski. “In 2015, renewable energy investors have deployed around USD$600 million of capital through Conergy's global downstream platform,” he commented. “More than $250 million of this capital was deployed into emerging markets, mainly in Southeast Asia.”