Global Energy Transition ‘Technically Feasible’, Says Enerray CEO

Italian solar specialist Enerray is a major player in the design, installation, development and management of utility scale and industrial photovoltaic systems. The company has been steadily growing since it was founded in 2007. Despite the fluctuating challenges of the global economic landscape.

In an exclusive interview, Impact4All speaks to Andrea Venezia, CEO of solar firm Enerray

Italian solar specialist Enerray is a major player in the design, installation, development and management of utility scale and industrial photovoltaic systems. The company has been steadily growing since it was founded in 2007. Despite the fluctuating challenges of the global economic landscape, Enerray has a €130 million turnover and substantial photovoltaic installation operations in Europe, Africa, South East Asia, Latin America and the Middle East for a total of about 800 MWp.

Nick Rice talks to CEO Andrea Venezia about the challenges faced and the continual growth of the solar sector.

The solar industry has evolved rapidly in recent years – what are the significant changes?

The landmark Paris Agreement adopted in December 2015 has sent a historical signal. Over 190 countries in the world have recognised the need for urgent climate action. By signing this agreement, the world community has committed to limit global warming to 2°C above pre-industrial levels. This is a very ambitious target.

Andrea Venezia, CEO, Enerray

Therefore, the world community needs new and more aggressive climate protection strategies than in the past. According to the European Centre for Medium-Range Weather Forecasts (ECMWF) the global temperature increased 1.3 °C above the pre-industrial level in 2016.

To achieve the Paris Agreement targets, we need a two-fold strategy – to reduce greenhouse gas emissions down to zero and to remove surplus carbon dioxide from the atmosphere. A key aspect of this strategy should be a transition to an emission-free global economy, based on renewable energy.

The agreement calls for global greenhouse gas (GHG) emissions to peak as soon as possible, recognising that this will take longer for developing countries, and for rapid emission reductions thereafter.

Furthermore, the United Nations has for the first time included energy in its new sustainable development goals, calling for a significant speed up in the deployment of renewable energy.

As two-thirds of global GHG emissions stem from energy production and consumption, which puts the energy sector at the core of efforts to combat global climate change, the successful outcome of the historic Paris Agreement will depend on a rapid transition to the global energy system, led by the power sector.

From an environmental standpoint – what are the biggest obstacles to growing the solar industry?

As increasing shares of power capacity are added globally, renewable energy sources on a level cost of electricity basis (LCOE) has become the least costly power generation source. The global average energy system LCOE is gradually declining, with solar PV emerging as the least expensive source of power generation.

A global energy transition to renewable electricity is no longer a problem of technical feasibility or economic viability, but of political will. The global community can significantly accelerate this transition by implementing favourable political measures and frameworks.

The first decisive prerequisite for a transition to a renewable energy is public support. The second prerequisite is a clear legislative framework promoting the fast and steady growth of renewable on the one hand and the phasing out of all subsidies to fossil fuel and nuclear energy generation on the other hand.

How important has the backing from an industrial group with a diversified business been for Enerray over the last 11 years?

That was crucial for us, and not only from a financial point of view. The Group has opened the doors to markets in which it already operated. We’ve had the chance to rely immediately on local commercial networks and employees speaking the local languages. Being a part of a Group worldwide operating is a major plus.

What is Enerray’s position on countries that reject or make solar difficult?

Renewable energy can be cost-effective in economic terms even in countries that penalise solar energy. For example, in Italy, the country where Enerray was born and has gained its first experience as an EPC [Engineering, Procurement and Construction]and O&M [Operations and Management] contractor, the law has been in favour of photovoltaic sector with good Feed-in tariffs until the first half of 2014.

Then, due to the achievement of the cost limits dedicated to financing renewable energy, the government has not renewed this incentive.Moreover, the same government issued decrees to reduce Feed-in tariffs retroactively and lowered the selling price of energy fed into the power grid.

This has challenged the construction of ground-mounted photovoltaic systems, but rooftop solar systems have remained cost-effective, especially for energy intensive companies, if designed in such a way as to guarantee a high self-consumption rate.

The Middle East is shifting towards solar energy but why did it take such an affluent region so long to invest in a solar future?

The energy sector in the Middle East has been dominated by fossil fuels in the past but nowadays the region is having an important shift towards solar energy due to lower costs of PV systems and, at the same time, an increase in the price of oil.

Consequently, the use of renewable energy is gaining political attention worldwide, and many Middle Eastern countries are putting in place ambitious renewable energy programmes, particularly due to the increase of electrification rate and energy demand in the region.

What are the current trends or new developments in the industry?

The development of technology never stops and the need to face new challenges has led Enerray to develop other solar technologies such as Concentrated Solar Power (CSP) and Off Grid solutions.

Regarding CSP, Enerray is working with some important European and local research institutions to develop a 1,5 MWe plant in Morocco with an innovative Thermal Energy Storage System (TES). In this case, there has been a synergy with another company of the Maccaferri Industrial Group, Exergy, that provided the turbine of the system. The plant has already been constructed and will be activated soon.

With the Off Grid technology, it’s very important for Enerray to bring solar energy to those countries where the power grid cannot arrive. Enerray operates in the global off grid market through the company, Plug the Sun – a firm capable of offering customisable solutions, innovative and unique products for rural electrification and urban living.

The company is young but very active and is working on different projects, from Latin America to South East Asia, for the installation of thousands of solar home systems.

What are the challenges being presented at the moment?

For a solar EPC, margins are very compressed, independently and from the complexities of every single market. With the current level of market competition, nearly 100 per cent of the key component price drop goes to the benefit of clients. Of course, more projects can be realised worldwide with lower capital expenditures, so we would say that we do have a positive indirect effect.

Utility-scale projects will probably become bigger and bigger and contracts will be more segmented. This implies high turnover but also high risks, since an EPC has to work with very low margins and face many unexpected problems during construction. As for the distributed generation segment, we would say that margins are not particularly high, but risks are also limited.

What are the positives for the industry now and for the immediate future?

The development of the power sector is characterised by a dynamically growing electricity demand driven by developing and emerging countries and an increasing share of renewable electricity in the overall supply mix.

The results show a growing renewable electricity trend that will compensate for the phasing out of nuclear power production as well as for the continually reduced number of fossil fuel based power plants.

Development of renewable energy has emerged as a true multi-beneficial phenomenon, which enables climate change mitigation, drives economic growth, creates local value based on technology development, production, installation and maintenance, helps to increase energy access in a timely manner, and to reduce resource conflicts in water-stressed regions of the world.

A global transition towards a 100 per cent renewable electricity system will create over 36 million direct jobs in the power sector by 2050 – an increase from 19 million jobs added in 2015.

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