Building a local base with the help of government incentives is crucial for any country that is serious about having a solar industry, says Jack Curtis, the head of First Solar’s Australian and Asia-Pacific operations.
Curtis was speaking to Recharge after the company, one of the world’s largest solar-panel makers, opened its first engineering and procurement office in Australia.
He warns that the local solar industry is in a critical phase. “The Australian solar market has stagnated for far too long. This is an opportune time to rectify that. I’m not sure we are going to get the opportunity again,” he says.
“In five years, solar is either going to be relegated to the also-rans or have the potential to be something significant.”
The government has acknowledged the urgency of the task with renewable-energy assistance programmes, such as Solar Flagships and the planned Clean Energy Finance Corporation, along with plans to price carbon, Curtis says. He states that any government would be misguided to wait for other markets to drive down the cost of equipment.
“A lot of new entrants looking to build a solar platform, like Australia is trying to do, think that because markets like the US and Germany will bring the cost down, they don’t need to support the sector with incentives,” he says.
“You really need to localise the industry, whatever type of industry you are trying to build. Even though the core technology — such as the solar panel — may be built elsewhere and the cost of that will fall regardless of which market you sell it into, there’s a lot more around the broader value chain, such as engineering and financing, that needs to be localised in any market.”
For First Solar, momentum is picking up in Australia. Having installed the country’s largest rooftop array at the Adelaide Showground, it won the tender to supply 150,000 thin-film modules to Australia’s first utility-scale PV project — the 10MW Greenough River solar farm near Geraldton in Western Australia. For that project, First Solar is partnered by GE and Australian utility Verve Energy.
Curtis says Australia has the attributes the company looks for when setting up in a new region, including a healthy economy, favourable regulatory environment and good grid connectivity. It also has an established residential solar market, helped by states’ varying feed-in tariffs, although some of these have been reduced in recent months.
“We can get more bang for our buck with utility-scale solar or large free-field solar, which is now our big focus,” Curtis says. “At federal level, there are certainly encouraging programmes that target and support such applications.
“If we can leverage these over the next five years, those broader attributes will still be there in the long term to support our business, and we won’t need those kinds of incentives.”
Curtis, who is based in Sydney, acknowledges that political uncertainty continues to cloud the local outlook. The opposition Liberal-National Coalition has threatened to rescind some of the assistance programmes promised by the Labor minority government, as well as to repeal any carbon legislation. Although a federal election is more than two years away, Labor is struggling in opinion polls.
“The number-one criticism that any company would have of a policy mechanism is if it’s not sustained,” Curtis says. “Unfortunately, regulatory uncertainty is part and parcel of the job, because at this stage every market that First Solar is in has some form of regulatory support.”
Warning that the market will implode if the opposition decides not to provide the financial support promised by Labor, Curtis says: “Australia can’t afford another false start.”
First Solar, however, is not discouraged by its failure to win government assistance in round one of the federal Solar Flagships programme. The company was shortlisted twice, in partnership with utilities AGL Energy and TruEnergy, but lost to the Moree Solar Farm consortium, led by BP Solar. It plans to bid in the second round, probably in partnership with a utility.
Curtis says: “We came up with credible bids [for round one]. In our view, they were very bankable. It came down to three factors: that you have someone to buy the power; the ability to finance that plant; and the involvement of someone who understands the true value of solar.”
Although Curtis says it is too ealy to confirm bidding partners, that will be the approach First Solar takes in round two, due in 2013-14. “We would be focused on those who we think are equipped to own and operate the plant and buy the power sensibly. I can’t imagine a dramatic deviation in strategy.”
