IEA echoes calls for European PV manufacturing scale-up

The head of the International Energy Agency’s (IEA) renewables division has called on Europe to boost PV manufacturing by thinking outside the box and utilising “exceptional instruments”. Speaking on a webinar hosted by trade body SolarPower Europe this week – which can be viewed in full here and was covered by PV Tech Premium – Paolo Frankl echoed comments made by manufacturers during the discussion that creating scale “is the most single important thing” for European solar manufacturing. He said: “We really need to think out of the box on how to react to this extremely difficult and peculiar moment. Otherwise, I see a concrete risk that indeed the first investments go somewhere else, notably in the United States and India.” Frankl added that he looks forward to seeing how the new Solar Photovoltaic Industry Alliance can be translated into concrete support for the sector.

Inflationary pressures could lead to greater consolidation

Against the backdrop of soaring inflation in most of the world, companies with mature asset portfolios and little exposure to government auctions and similar offtake structures are well placed to benefit, according to Bruce Huber, CEO of Alexa Capital. In contrast, those that are caught up in the delivery of projects with low, fixed-price contracts could struggle, adding that present conditions are tending to favour larger players because they usually have more robust supply chains. As a result, these larger outfits can access capital markets more efficiently, reinforcing their dominance, Huber said. As such, he expects to see greater market consolidation, with larger players looking to expand their reach through the acquisition of smaller rivals. Even if high inflation persists, despite the actions taken by central banks the world over, renewable projects are likely to remain one of the safer investment asset classes regardless of market conditions. “The bottom line is that new development is at high risk of slowing down if markets believe inflation cannot be contained, and if supply lines do not stabilise. We are medium term and long term optimistic, but appreciate that the next few quarters will have some tough trading,” Huber concluded.

Romanian market set for rapid growth

Even though Romania has currently just 1GW of installed solar capacity, the country is poised to experience rapid growth in the coming years. Favourable policy conditions are currently in place and with the country’s need to phase out its highly polluting lignite-coal capacity, interest in renewables will further increase, according to senior associate of South Eastern European markets at Aurora Energy Research, Panos Kefalas. A Contracts for Difference (CfD) scheme expected to be launched in 2023, pending the Romanian government’s approval, could support the addition of up to 3.5GW of solar PV and onshore wind capacity by the end of 2024, with 1.5GW auctioned by the end of 2023. Meanwhile, power purchase agreements (PPA) are set to expand in the Romanian market in the coming years, as companies are lured by more lucrative contracts and higher returns despite the higher risks.