Riding the solar wave

Japan market keys Hanwha Solar-One improved results, first South African IPP project interconnected, healthy skepticism about planned Zimbabwean PV farms

Hanwha Solar-One is the latest publicly traded PV firm to ride the wave of improving financial results in the sector. The Hanwha solar entity, which benefits from the deep-pocketed backing of its huge South Korean parent, saw its second-quarter module shipments rise 11.1% with a corresponding increase in revenues of 6.3%. Gross margin increased to 5.4% and net losses were trimmed to $27 million from the previous quarter. Some 54% of those shipped modules went to two markets—Japan (34%) and South Africa (20%).

Although the South African portion will dissipate later this year as the 155MW deal generating those regional numbers is completed, the Land of the Rising Sun (and its healthy average selling prices) will remain key to HSOL’s ongoing plans—and part of its capital investment strategy. “The Japanese market requires intense focus on quality, and we are establishing our new tech center there this quarter to better serve the market and dedicating manufacturing lines for products sold to Japan,” according to company president Min-Su Kim in the Seeking Alpha transcript of the earnings conference.

The burgeoning South African market achieved a milestone recently with the interconnection of the first major project in the initial phase of Renewable Energy Independent Power Producers Procurement Program, usually referred to by the clunky initialism, REIPPPP. Scatec Solar said in a press release that “its 75 MW solar PV plant, Kalkbult, in the Northern Cape region, connected to the regional grid on Friday [Sept. 6], three months ahead of schedule.” The installation, built by EPC firm Kentz, does not use any of those scores of megawatts of HSOL modules—BYD got the nod for that contract—and features 84 SMA inverters. After securing financing in November 2012, the company began “construction of the plant which consists of more than 312,000 solar panels mounted on 156km of substructure, inverters, transformers and a high-voltage substation.” The company is already hard at work building another pair of REIPPPP-mandated PV power stations totaling 115MW, which it expects to complete by mid-2014.

Zimbabwe may share a border with South Africa, comparable solar insolation characteristics, and a similar history of white-dominated rule in the past, but in terms of economic health (sickly) and political corruption (endemic), the land once called Rhodesia has been on a downward trajectory compared to its more developed and progressive neighbor to the south. Thus the Curator takes with a sizeable grain of salt the news that a multi-location solar PV project totaling 600MW of installed capacity will be built in the land that Robert Mugabe has longed ruled. PV-magazine picked up a report from the government-owned Herald newspaper’s website that the Eastway subsidiary of Zimbabwean developer Twalumba Holdings has inked a memorandum of understanding with the British company Thompson Cole Consortium—via its Chinese solar subsidiary Sun Gen and UK financing arm Belm Am–to develop eight 1.8 x 1.0km solar farms of 75MW each in rural areas of the country, in a deal said to be worth $1.6 billion ($200 million per site, or roughly $2.66 per watt). If the projects do come to fruition on a timely basis, the resultant job creation and renewable energy generation would greatly improve the lives of thousands of Zimbabweans. But given the likelihood that many of those million$ might just as easily end up lining the pockets of ruling party ZANU-PF cronies, that’s a big, big if.