Author: André Oerlemans
To prevent this phenomenon from enduring in the coming years there is a large need for maturation and professionalization of the industry, a general raising of the thresholds for subsidy applications and a demand for more solidly founded business models. Those are the main conclusions of experts from RVO (Netherlands Enterprise Agency), Eneco (a major Dutch energy utility) and Triodos Bank, shared in anticipation of the conference ‘The Solar Future NL 2017’, taking place on 18 May in Baarn. Prior to the yearly solar energy conference a free webinar will be hosted on the 29th of March, which is aimed at providing more information on tapping the potential of SDE+ subsidies and having projects reach fruition.
Market researcher Peter Segaar keeps track - in much detail - of how many SDE and SDE+ subsidies have been granted since 2008 and how many associated projects have been realized. According to his data the years 2011 and 2012 were particularly ‘bad times’, during which only (resp.) 58 and 32 percent of SDE-subsidized projects actually materialized. Although many projects that were granted subsidies are only developed after several years, he’s seen a lot of cancellations over the past couple of years. For example, of the record-breaking 883 MWs worth of subsidies that had been granted in ‘prime year’ 2014, 17.5 percent have by now been withdrawn by the RVO, while 137 MW worth of projects (15.5 percent) vanished by themselves.
Senior advisor of renewable energy projects Jorn ten Have of RVO acknowledges this, but expresses his optimistic view on it. “Of the projects that received subsidy in 2014, 15 percent has indeed been withdrawn, but between 25 and 30 percent of projects have been realized. They are grid-connected and are producing. Another 55 percent ranges between realization and withdrawal. In the end I expect that more than half of all projects will be developed,” he states.
Esther Zumpolle, solar developer at Dutch utility Eneco notices that around half of the projects that receive subsidies are either cancelled or realized on a smaller scale than initially planned. In most cases, this relates to applications from companies that intend to install solar systems on their rooftops.
All three of them point to several explanations as to why projects don’t reach fruition. The structure of intended rooftop wasn’t properly assessed and ends up being either too weak or too small for the envisioned solar system. Developers are surprised by high costs, an example being the high grid-connection fee for intensive energy users. They face unexpected difficulties with applying for permits or are refused financing by the bank. Sometimes agreements between developers and companies are unclear. Companies have a last-minute change of heart and decide on different investment priorities, passing up on the solar opportunity. Or the company that was looking to install a system is acquired by another organization.
An issue that Triodos Bank often comes across is that the associated bank of an organization or company that wants to install a solar system does not want to allow a mortgage on the building lease of the solar panels. “They find it too complicated. Sometimes it takes six month to finetune agreements on that with a customer. In a large number of cases it killed the project,” says Senior Relationship manager Marius Groenenberg of Triodos Bank.
Segaar sees a lack of professionalism across the industry. “Many amateuristic mistakes are being made,” he remarks. According to Zumpolle companies and developers are often not fully aware of all costs associated with developing a solar project. “If those costs are too high, their business case hits the red numbers and the project is called off,” she tells us.
Ten Have brings it down to poor preparation. “Most of the reasons can be brought down to that,” he says. “Roof constructions and regulations are known and can be anticipated, so better preparation is possible and necessary.”
The experts all agree on the topic of solutions: companies and developers need to come up with more realistic business cases. More banks than just Triodos or ASN Bank need to have the guts to invest in solar energy and demand more professionalism. RVO should have tighter selection criteria and test the feasibility of proposals. “All involved parties need to paint a more realistic picture of the costs and returns. The plans are often way too opportunistic,” Zumpolle feels. For her customers financing shouldn’t be the issue though. Eneco leases solar panels to companies and arranges everything, from subsidy request up until installation.
According to Ten Have the RVO has already implemented various important changes. Banks are now more likely to get into solar energy and many larger project developers offer lease plans. “You can definitely see a learning curve in the sector,” he claims. “As RVO we’ve already raised the threshold by demanding a feasibility study for projects about 500 kW. As a part of that, interested parties must indicate their own capacity and submit an exploitation model. Based on that, projects have been approved or delayed.”
Zumpolle and Groenenberg both strongly feel that the subsidies that end up not being used should remain available for other solar energy projects and shouldn’t just be thrown back into ‘the big money jar’. Zumpolle: “Now, designated subsidies can be thoughtlessly disregarded, while other serious and dedicated companies are left out.”
This year, 6 billion worth of SDE+ subsidies have been made available, a billion more than in 2016. Because other sustainable energy sources - such as additional use of biomass - are reaching their max, there’s more money available for solar energy projects, Segaar believes. “By now, we do see a rising level of professionalism in the industry,” he states confidently. Ten Have sees that as well. “I expect more realistic projects to be proposed in 2017 and 2018,” the RVO advisor says.