John Mullins explains why solar photovoltaic power tops the globally installed power rankings and why, through his new firm Amarenco, he has established the first renewable investment fund regulated by the Central Bank of Ireland
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It was a case of ‘back to the future’ for former Bord Gáis Éireann CEO Mullins (CEng, FIEI), when he decided to found a company dedicated to investment in solar photovoltaic (PV). His final-year project in electrical engineering in University College Cork in 1989 was on solar PV installations and his master’s degree in engineering covered the subject of high efficiency IGBT DC-AC inverter circuits.

A lot of water has flown under the bridge since then, Mullins has acknowledged, but he is convinced that he has set up a company and a fund in a significantly growing, renewable-energy market worldwide.

Solar energy is the most abundant form of energy on earth. Solar energy from sunlight is directly convertible to electricity via the photovoltaic effect, which was discovered in 1839, when Becquerel found that the electrolytic effect was enhanced when exposed to light. The European Photovoltaic Industry Association estimates that all of the European Union’s (EU’s) energy needs could be met by photovoltaic systems covering approximately 0.7% of the land area of the EU.

The generation of electricity from solar PV as we know it today commenced development in the 1950s out of Bell Labs. The use of solar PV in space applications was the key motivator in producing the first solar modules.

Photon energy when absorbed creates electron-hole pairs and this becomes the source of power. The p-n junction creates the chemical imbalance, which enables the flow of electricity. The power output is a function of the absorbed photon energy.

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The first solar cells were 4% efficient, whilst most commercially available modules are over 20% efficient today.

RECENT SOLAR PV MARKET DEVELOPMENTS

Solar PV has been growing in popularity in recent years

European solar PV installations began to rise significantly in 2007 due to: reduced costs of modules; higher efficiency of modules; and energy market policies toward solar PV. Since 2007, we have a seen a global meteoric rise for solar PV. For the last number of years, it has been the number one source of newly installed power in the world.

Solar photovoltaic systems produce a low level of carbon emissions – total lifetime emissions per MWh are approximately 13kg CO2/MWh versus 1000kg CO2/MWh from lignite power stations. European governments and other governments throughout the world have expressed their interest in continued growth of the solar photovoltaic sector as a method of abating or reducing threats of climate change.

Additionally, as solar power is an abundant renewable energy resource, solar photovoltaic systems provide potential benefits for energy security and reduce the need to source energy from more expensive and difficult-to-develop technologies.

Specifically in the EU, the legislation supporting the adoption and utilisation of renewable energy is the Renewable Energy Directive. This, as part of a wider set of binding targets, sets a target that 20% of total final energy consumption by EU member states should be obtained from renewable resources by 2020.

Each individual member country (the 28 member states of the EU) must supply and implement a National Renewable Energy Action Plan, which sets out the steps, policies and supports to achieve its agreed goal.

The cost of photovoltaic systems has fallen dramatically, as the amount of installed capacity of photovoltaic has increased. By the end of 2012, the long-run cost of electricity (LCOE) generated from newly installed solar photovoltaic systems had fallen to parity with the socket price.

SOLAR PV INSTALLATIONS

The growth in solar PV since 2001 (click to enlarge)

At the end of December 2012, over 100 GWp of solar photovoltaic systems had been installed worldwide. In Europe, of the approximately 18 GWp of solar photovoltaic systems which had been installed last year, some 5 GWp was installed in utility-scale grid-connected projects. Overall investment in solar PV systems represents the single largest investment in European electricity generating capacity, both by output capacity and by investment (18 GWp approximates to €30 billion of capital expenditure).

Utility-connected grid-scale solar projects are generally considered to be ground mounted or flat-roof mounted projects with a capacity of over 1 MWp (enough electricity for the energy needs of approximately 1,000 people). Utility-scale solar projects currently benefit from various government and market incentives to foster the growth of the sector.

In most cases, this comprises preferential access to the electricity grid – within the technical capacity of grids to accept the solar electricity – and a set of tariffs or green incentives which offer higher prices to solar photovoltaic electricity generators than to gas, coal, oil or nuclear powered electricity generators.

In nearly all established markets, this price – although higher than that available to non-renewable sources – has dropped below, or is very close to, the price paid for electricity by the consumer and smaller industries. The installation price of solar PV systems is expected to continue to drop as installed capacity, manufacturing economies of scale and competition between equipment manufacturers increase. As of May 2013, approximately 5.2% of peak EU electricity demand can be provided by installed solar photovoltaic systems.

Due to the absence of fuel cost and reduced maintenance and administration complexity, the operation of the solar photovoltaic systems is relatively straightforward and scalable. A typical solar power plant will have a minimum expected lifetime of over 20 years. There is a growing group of plants and photovoltaic installations still operating that were initially installed in the late 1980s and, therefore, have over 30 years of stable operating history.

NEW REGULATED FUND

LCOE from newly installed solar PV systems is now on par with socket price (click to enlarge)

The lack of available project financing for the renewable sector and low yield from deposits has driven institutional interest in asset-backed securities. The drive towards responsible investment at an attractive yield is also motivation for the establishment of a green regulated fund in Ireland, the Global Solar Income Fund, which is focused on the retail and institutional markets.

There have been successful listings of Greencoat and Bluefield on the London Stock Exchange in both onshore wind and solar assets over the last six months.

The Global Solar Income Fund has a target annualised yield of 7.5% with a target 6% dividend each year over ten years. Amarenco has delivered a significant pipeline of over 200MW in France and the UK for the fund. This development is a clear example in the renewable energy space of where engineering excellence and efficiency has enabled new financial products to be presented.

John Mullins is chief executive officer of Amarenco, a company focused on solar development, financing and ownership in Europe and the US. Previously, Mullins was chief executive of Bord Gáis Éireann from December 2007 until the end of 2012. During this time, BGE established a significant electricity business, renewable and conventional generation assets. He has held senior management positions with ESB, ESB International and PricewaterhouseCoopers(UK) and was chief executive of Bioverda, part of the NTR plc Group.

Mullins is a fellow of Engineers Ireland and the Irish Academy of Engineering and is a member of the UCC Governing Body. He was also recently appointed chair of the Port of Cork Company. He holds a bachelor and master’s degree in electrical engineering and an MBA from the Smurfit Business School in UCD, Dublin. 

http://www.engineersjournal.ie/wp-content/uploads/2013/07/Photovoltaic-1024x683.jpghttp://www.engineersjournal.ie/wp-content/uploads/2013/07/Photovoltaic-300x300.jpgDavid O'RiordanElecenergy,European Union,renewables,solar
It was a case of ‘back to the future’ for former Bord Gáis Éireann CEO Mullins (CEng, FIEI), when he decided to found a company dedicated to investment in solar photovoltaic (PV). His final-year project in electrical engineering in University College Cork in 1989 was on solar PV installations and his...