India’s Solar Opportunities and Challenges
A perspective on JNNSM selection guidelines for grid-connected solar projects

by Raj Prabhu, Managing Partner at Mercom Capital Group and Alfonso Velosa III, Research Director at Gartner

India’s Jawaharlal Nehru National Solar Mission (JNNSM), a major initiative of the government of India, has set itself a goal of creating an enabling policy framework for deploying 20GW of solar power by 2022. India’s objectives and intentions are commendable. Yet, as we have seen globally, once governments announce their intentions to develop a solar incentive program – a variety of interest groups, each with their own agenda, get involved to put their stamp on the policy. The final output of the recently released policy guidelines reflects both the overarching objectives of developing clean solar power, addressing power shortages and stakeholder concessions.

This is our preliminary perspective on the recently released guidelines for new grid-connected solar power projects in India. In the future, we will take further in-depth looks at specific policy aspects and India’s opportunities and challenges as the market develops.

PV & CSP Ratio
The JNNSM calls for a total aggregated capacity of 1 gigawatt of grid connected solar projects to be developed under the bundling scheme in Phase-I through 2013. Solar PV technology projects and CSP technology projects are to be deployed at a ratio of 50:50, in MW terms. This provision is scheduled to be reviewed again in one years time to determine the need for modification.

The JNNSM is trying to encourage the development of both PV and CSP technologies by giving each equal weight. However, by allotting specific quotas for each technology, the JNNSM is dictating the ratio of technology that can be built rather than allowing the market to select the most efficient and cost effective technology for India. If CSP is deemed an unviable option for most developers and there is a rush towards PV technology, it could create a situation where PV applications are rejected due to oversubscription while CSP quotas are not filled. A scenario like this can slow down solar development progress country-wide and cause unwanted delay as the markets wait for this provision to be revisited. On a global scale, PV installations exceed CSP installations by a ratio of over 20 times.

Phasing Allocation of Capacity
The JNNSM is allocating capacities for Phase 1, over two batches: batch1 in FY 2010-2011 and batch 2 in FY2011-2012. The total capacity of Solar PV projects selected in Phase 1 is limited to 150 MW. Solar PV projects selected for the remaining capacity (350MW) will be done in the second phase for FY 2011-12. The selection of Solar Thermal Projects for the entire capacity of 500 MW, less migrated projects, will be done in FY2010-11.

Taking a lesson from other markets like Spain, JNNSM is trying to avoid a “rush” by controlling the allocation of projects and phasing them in over a period of time. 150MW for solar PV during the initial allocation is already being perceived as a disappointment to the industry. When you take into consideration the 50:50 ratio between PV and CSP, the economies of scale will be too small to bring down costs and increase efficiencies. These factors could cause investors to take a wait and see approach before making large investments without knowing how big the eventual market potential will be or when the market will develop to a certain size.

Instead of looking at this market as 1GW by 2013, it is now perceived as 500MW due to the 50:50 split between PV and CSP. 500MW over 3 years (approximately 165MW a year) for PV is not large by global standards.

Number of Applications (PV)
In order to have wider participation from Solar Power Developers, only one application per company including its parent, affiliate or any group company is limited to developing one project of 5 MW (±5%) using Solar PV. We are assuming that this limitation applies to each phase/batch and for the entire JNNSM.

This policy opens up opportunities for multiple developers to participate, regardless of size. This is good for developers who might not have growth aspirations beyond one or two projects, but are looking for a long-term high-return investment vehicle rather than being a serious solar developer with long-term growth intentions.

For serious solar project developers, it will be very difficult to have a long term growth strategy to develop projects under the JNNSM, as their market size will be limited due to the cap of 5MW per phase/batch. This policy will also force project developers to look at individual state programs and incentives as a viable alternative.

Raising capital for serious project developers may also get tougher as the upside for investors and growth will be limited and there is complete uncertainty as to how projects will be allocated in the next phases/batches. Financial institutions will also have to amortize their funding costs on just 5 MW, which may not justify the need to develop expertise in PV projects.

Number of Applications (CSP)
The total capacity of Solar Thermal Projects to be allocated to a company (inclusive of its parent, affiliate or group company) is limited to 100 MW. The company can submit application for multiple projects at different locations subject to a maximum of 100MW.

The 100MW limit provides better economies of scale for CSP systems, making it more attractive for CSP project developers compared to PV. However, it is unclear if there are other important policies in place, particularly policy pertaining to critical water resources, to support CSP development. The company proposing a CSP project is fully responsible for acquiring water rights for the life of the project and needs to document this as part of its application. Another concern is that CSP projects may take more time than the policy has allowed depending on the availability of local materials and construction requirements.

Technical Criteria for PV
PV modules used in grid-connected solar power projects must qualify to the latest edition of any of the following IEC PV module qualification test or equivalent BIS standards. (Crystalline Silicon Modules IEC 61215; Thin Film Modules IEC 61646; CPV Modules IEC 62108) Each PV module used in any solar power project must use a RF identification tag.

Since the government is only paying for the electricity generated, it is up to the solar developer to determine the modules they will use in their PV system, so they can generate the most power and thus get the best return for their projects. RFID tags, which are internationally accepted, will be used to enforce the standards, however RFID tags and checks can create additional layers of bureaucracy.

The nameplate standard test conditions are just a basic criteria for specifying the power capacity of a PV system. It is important to remember that each system will have different electric power outputs, and this will vary by State, due to local temperature, humidity, wind and other variables. For example, a 5MW system in Gujarat will perform differently than the same system in Karnataka.

Technical Requirements for eligibility of a PV plant
As there are no eligibility requirements put in place for Solar PV developers this opens up the market for anyone who wants to develop a PV project. By not having any eligibility requirements, project developers with the lowest bid regardless of experience, can end up with project approvals. This can cause similar problems as seen in Spain where a lot of projects did not get developed or when they were developed, were of poor quality. While there is a performance guarantee, it would be approximately less than 3.5% of the project cost.

Technical Criteria for CSP
Any of the Concentrated Solar Power (CSP) technologies, Parabolic Trough Collectors, Solar Dish Stirling (or any other prime mover), Linear Fresnel Reflector, Central Tower with heliostats, or a combination of any can be used.

This is a significant improvement from the draft policy as it opens up projects to new technologies. An attempt has been made to ensure qualifications of CSP developers, unlike the case for PV developers. CSP developers must fulfill eligibility requirements that require them to be an EPC provider/technology provider or have a tie-up with one. Experience of developing at least a 1MW CSP (100MW in the case of conventional thermal experience) project is also required.

Connectivity with the Grid
The policy calls for plants to be designed for interconnection with the State Transmission Utility (STU) at a voltage level of 33 kV or above. Further, the interconnections should be at the substation (substation should be 33kV/132 kV or higher voltage levels) and not the distribution substation. The project developer should indicate to the TRANSCO the location (Tehsil, Village and District as applicable) of its proposed project. The policy ensures that the PV system owner gets connected to the grid based on their local conditions.

The impact of a large amount of electricity from an intermittent power source, such as PV or CSP, on the overall electricity grid still needs to be factored in. Although the risk of this is low for PV, since the systems are small and dispersed and should not have the same weather induced load fluctuations, there may be a bigger issue for the larger CSP projects. This could potentially lead to problems during peak usage periods. Power fluctuations and brown outs need to be addressed as inverters can shut down, shutting the power production during the time of most need and leading to significant revenue losses.

An additional factor relates to the frequency of power-out periods unique to the Indian electricity grid. On an average day, there are often several periods with brown-outs or black-outs – that may add up to hours during critical hours of performance for solar systems. For a solar system to generate its return, it needs transmission capabilities or storage. Either of these situations increases the risk and cost for a PV system and lowers the return for system developers and system investors. It will also raise a concern of accuracy of measurement for solar system output in order to qualify for the government Feed-in-tariff payment. This may require the services of 3rd party monitoring solutions.

Domestic Content (PV)
Solar PV Projects using crystalline silicon technology selected in the first batch during FY2010-11 will be mandated to use modules manufactured in India. For Solar PV Projects selected in the second batch during FY2011-12, they will be required to use cells and modules manufactured in India.

The domestic content policy is intended to create incentives to develop domestic manufacturing, investments and jobs.

Thin film and CPV can still be procured from any vendor in the world and equipment shortage should not be a problem as the allocation is so small compared to manufacturing capacities. However, since the PV allocation is so small (150 MW in 2010-11, and remaining in 2011-2012), it is not enough to realize gains from economies of scale. Domestic content rules create unwanted attention from the WTO and trading partners. This puts Indian manufacturers in a delicate situation as they still have to export to European countries as the Indian manufacturing capacity per year might be more than the 500MW allocated for PV over 3 years, not to mention that capacity could be cut even further if half the project developers choose to use thin film. Ontario has enacted a similar policy and has been threatened by the EU and Japan of possible legal challenge in the WTO due to the protectionist policy. Thus, the domestic content policy has the potential to hurt the Indian solar export industry as an unintended consequence.

The policy also creates uncertainty in the mind of investors as they are told to buy from manufacturers mandated by the JNNSM instead of allowing developers to select panels based on the best prices and efficiencies available anywhere in the world. This could be another cause for foreign investors to take a “wait and see” approach as the market in the first 3 years may not be attractive enough to warrant large investments.

This also causes a high level of uncertainty and confusion due to the patchwork of domestic policy (2010-11 - crystalline silicon modules – domestic only, thin film and CPV can be imported, CSP – 30% of components other than land has to be domestic); 2011-12 - crystalline silicon modules and cells – domestic only). It appears that this provision is an attempt to please “all parties” and has made the policy unnecessarily complicated to be implemented.

Domestic Content (CSP)
It is mandatory for project developers to ensure 30% of local content in all their plants/installations for Solar thermal technology. Land is excluded.

This gives developers the advantage of procuring the main components of CSP from anywhere in the world, while also creating a boost to domestic BOS vendors. That said, there is an uncertainty factor relating to BOS vendor products and quality as CSP has been non-existent in India.

Selection of projects based on Tariff (Bidding)
The short-listed projects are required by NVVN to submit an Request for Proposal (RfP) bid indicating the discount in Rs/kWh on CERC Approved Applicable Tariff.

This will achieve discounted pricing by creating a bidding process particularly in the case of solar PV projects, while CSP projects may not have to go through bidding process if there is a shortage of applications. Since the PV projects applied for exceeds the allocation, bidding is inevitable, making the feed-in tariff immaterial except as a starting price to bid.

There is a stiff bid bond implemented to curb aggressive bidding.  In the case of PV, since there are no qualifications or eligibility requirements for project developers, the lowest bid still wins.

As evidenced in Spain and other countries, lack of expertise and qualifications among project developers can lead to poorly executed projects, producing at much lower capacities.  The other side of the argument is that project owners get paid for only what they produce.  However, with India’s unique power situation and severe power shortages, the goal should be to maximize production.

After a 15% discount or more, state feed-in tariffs will start to look very attractive. State project requirements might also be less onerous. Most states have feed-in tariffs set for 5-10 years, if these can be extended to 20-25 years, states will gain significant investments and jobs while generating their own clean solar power.

Role of States

Land Acquisition
Land in India is a scarce commodity and land acquisition and permitting can take considerable time. With CSP projects getting the same allocation as PV (500MW) there will be a larger requirement for land. Land requirements for CSP projects are often double that of PV. How states handle land allotments will be an important issue.

Water Allocation for CSP projects
It is again surprising that the solar mission decided to allot CSP 500MW in the first phase instead of letting the markets select the most cost effective and efficient technology.

India has a severe shortage of water. Water intensive CSP projects may not be a sustainable source of power in many parts of the country. The most conducive areas for CSP is the northwestern part of India especially in the Rajasthan desert. Water availability in these areas is scarce. CSP developers will need to secure water rights and ensure continuous water availability for 25 years. Water requirements for parabolic trough and Fresnel can be about 3000L/Mwh and central towers consume about 2000L/Mwh of water. Alternatives to water-intensive CSP technologies include dry cooling systems, which are less efficient and increase costs; and dish stirling systems which are commercially unproven for large scale projects.

Role of Carbon Financing
The policy starts to introduce market forces around solar. For example, the use of solar renewable energy certificates (REC) has the potential to lower states’ costs for this Feed-in-tariff . However, solar REC markets are young and immature. While they have driven some renewable energy markets, it has been due to the government creating a clear market and a set of buyers for solar RECs and other forms of carbon financing. Otherwise, solar RECs have very little value and may not help India achieve its energy objectives.


All though there are some challenges with the guidelines, it should be noted that the Indian solar industry was virtually non-existent 12 months ago and the JNNSM is a commendable, forward looking policy and it is in all stakeholders' interest to make solar power a viable alternative energy in India to meet the tremendous capacity growth that will be experienced in the near future.

Click here for a factsheet on the JNNSM Guidelines.

- END -

July 31, 2010

Indian Solar Industry - Cautiously Optimistic

Highlights from SOLARCON India 2010

Mercom Communications India, Pvt. Ltd., a subsidiary of Mercom Capital Group, a clean energy communications and consulting firm attended the SOLARCON India 2010 conference held in Hyderabad last week. Having also attended 2009 SOLARCON, the difference in the mood was evident, with a rush of participant interest and enthusiasm. In 2009 participants were unsure of what the future of the sector had in store for them and relied on speculation about the future of the industry, whereas this year the conversation centered on achieving targets set by the ambitious Jawaharlal Nehru National Solar Mission (JNNSM).

The Indian Solar industry is trying to figure out the finer points in the recently released guidelines for selection of new grid-connected solar power projects. Private investors were looking for the right vertical in which to invest, be it module manufacturing, developing solar farms or aligning with companies which have already found its place in the sector. Foreign companies appear to be evaluating their positions as the JNNSM mandates the purchase of crystalline silicon modules manufactured in India for FY 2010-11 and both cells and modules in India.

There was also concern among some suppliers regarding the pricing that they are able to obtain in the India market. Suppliers see the margins in India to be wafer thin when compared to the US or European markets making scale and potential size of the Indian solar market vital before large investment decisions are made. Among EPCs, the most common concern was new market entrants with a lack of experience, which could result in poorly executed projects, which in turn will slow down industry progress all together and may ruin the reputation of legitimate EPCs.

The biggest cause of concern for all industry stakeholders has been the scale of the projects. Most of the projects announced are of 5-10MW scale and this is not attractive enough for large developers, foreign companies, EPCs or module suppliers as it will not result in optimal project economics.

On the state level, one observer commented that although many states have announced aggressive plans for solar installation, Karnataka is the only state which has successfully commissioned two projects of 3MW each.

On the whole the mood at the conference was upbeat with a dose of cautious optimism.

July 6, 2010

Mercom Capital Group Reports Second Quarter 2010 Funding and Merger and Acquisition Activity for Solar Energy, Smart Grid and Wind Energy Sectors

Mercom Capital Group, llc, a clean energy communications and consulting firm, today released M&A and funding activity for solar, smart grid and wind sectors for the second quarter of 2010.

“In addition to tracking VC funding activity, Mercom is also paying close attention to project financing. While VC funding can be indicative of the health of the technology side of clean energy, project financing activity can indicate the health of the end markets. In the second quarter, we saw a lot of project financing and loans, giving us confidence that projects are getting funded, which was a big concern coming out of the recession. We also saw a lot more activity in both funding and M&A for Smart Grid,” commented Raj Prabhu, Managing Partner of Mercom Capital Group.

Solar Energy
Total disclosed investments for the solar sector came in at $13.8 billion for 34 transactions compared to $1.7 billion for 30 transactions during Q1. The $11.7 billion in loans issued to Suntech and Trina Solar by the Chinese Development Bank skews these numbers heavily. Without these two loans, Q2 funding activity was only slightly higher than Q1. In addition to Suntech and Trina, other significant funding transactions in the sector included a $175 million private placement by Solyndra, a Series D raise by BrightSource Energy of $150 million, a Series B raise by Amonix of $129.4 million, a debt and equity raise by Solar Power Partners for $115 million, project financing secured by AES solar for $128 million and a credit facility secured by Sunpower for $350 million.

Merger and acquisition (M&A) activity for Q2 was relatively similar to Q1 activity with 11 M&A deals compared to 10 deals in Q1. Out of the eleven M&A transactions, only two of them were disclosed for a total of $298 million compared to the first quarter where six were disclosed for $784 million. A significant M&A transaction in the sector included the acquisition of NextLight by First Solar for $285 million.

Smart Grid
Smart Grid saw a significant increase in both funding activity and M&A activity in Q2 compared to Q1. Total disclosed investments for the smart grid sector came in at $305 million for 12 transactions compared to $112.1 million for 15 transactions during Q1. A significant funding transaction in the sector included $165 million raised by Landis+Gyr.

Out of nine M&A transactions, two were disclosed for a total of $1.3 billion compared to the first quarter which had a total of 7 deals of which only one was disclosed for $10 million. Included in these totals was the Ventyx acquisition by ABB for an estimated $1billion and the acquisition of Teridian Semiconductor by Maxim for $315 million.

Wind Energy
There was higher funding activity in the Wind sector in the second quarter of 2010 compared to Q1 due to an uptick in project finance and construction loan activity. Disclosed investments for the wind sector came in at $3.4 billion for 17 transactions out of a total of 19 transactions for the quarter. This compares to $1.4 billion for 15 transactions during Q1. Included in these totals were six significant transactions each over $300 million including project financing by Renewable Energy Systems Americas for $500 million, a $375 million loan for Acciona’s Eurus Windpark, a $302 million loan for Dong Energy, a $375 million line of credit for Duke Energy/Green Frontier Windpower, a $400 million equity financing by Pattern Energy and a $732 million credit line for China Windpower. Other transactions included equity financing by A2SEA for $141 million and equity financing by EDP Renovaveis for $141 million.

Out of 23 M&A transactions, seven were disclosed for a total of $515 million compared to the first quarter with a total of 7 deals of which only two were disclosed for $224 million. Significant transactions in the sector included the acquisition of Transfield Services’ MT Wind Farm by Meridian and the acquisition of the SC Wind Power Park by Petrom for $136 million.

According to the Department of Energy (DOE) $1.7 billion was spent in the second quarter of 2010 compared to 1.3 billion in Q1. DOE has spent a total of $4.85 billion so far, out of the $29 billion funding commitments from Recovery Act funding.
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July 6, 2010

Mercom Capital Group Reports Funding and Merger and Acquisition Activity on Health Care IT for Second Quarter 2010

Mercom Capital Group, llc, a communication and consulting firm specializing in health care technology and clean energy, today released the health care IT M&A and funding activity for the second quarter of 2010. $118 million was invested in six transactions compared to $82 million for eight transactions during Q1.

Merger and acquisition (M&A) activity for the sector saw a decrease in the number of deals, but a significant increase in values with several large M&A transactions announced during the quarter. Out of nine M&A transactions, five of them were disclosed for a total of $2.2B compared to the first quarter with a total of 27 deals of which six were disclosed for $617.5M.

Raj Prabhu, Managing Partner of Mercom Capital Group, commented, “Q2 was a strong quarter for the health care technology sector with a lot of activity, both in equity investments and with some significant M&A transactions.” Notable transactions for the sector included a series C raise of $60M by Castlight Health, the $685M acquisition of Phase Forward by Oracle and the $1.3B merger of Allscripts and Eclipsys.
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April 12, 2010

Mercom Capital Group Releases Financing and M&A Reports on Solar, Wind, Smart Grid Sectors for First Quarter of 2010

Mercom Capital Group, llc, a clean energy communications and consulting firm, today released M&A, funding, financing and loan activity on the solar, wind and smart grid sectors for the first quarter of 2010.

Solar
Disclosed investments in the solar sector totaled $1.7 billion out of 30 transactions. Solar merger and acquisition (M&A) transactions in the first quarter totaled $784 million in six disclosed deals out of a total of 10 deals.




Forms of investment included venture capital (VC) funding, financing and loans, with VC investments coming in at $297.75 million in 18 deals and all other financing and loans totaling $1.4 billion in 12 deals. Significant investments in solar include a $760 million project financing for Torresol Energy, a $250 million credit facility for MEMC and a $120 million debt and equity financing for Atlantic Wind and Solar, Inc.







According to the Department of Energy (DOE) just $3.1 billion, representing only 12% of awarded funds, has actually been spent as of April 2, 2010. DOE has awarded a total of $26.7 billion so far. Out of $3.1 billion, a total of $1.4 billion was spent in the first quarter of 2010.


Wind
Disclosed investments in the wind energy sector totaled approximately $1.4 billion for 15 transactions. Wind merger and acquisition (M&A) transactions in the first quarter came to $224 million in two disclosed deals out of a total of seven deals.

Forms of investments included venture capital (VC) funding, financing and loans. VC investments were $101.3 million for 3 deals and all other financing and loans totaled $1.304 billion for 12 deals. Significant investments in wind include a $394 million project financing for Terra-Gen Power, $194 million project financing for Boralex Inc and a $179 million project financing for Invenergy Wind North America.




Smart Grid
Disclosed investments in the smart grid sector totaled $112.13 million for 15 transactions. Smart grid merger and acquisition (M&A) transactions in the first quarter was $10 million in one disclosed deal out of a total of seven deals.


Forms of investment included venture capital (VC) funding, financing and loans, with VC investment coming in at $89.13 million in 12 deals and other financing and loans totaling $23 million in three deals. Significant investments in smart grid include a $31 million VC funding for Cymbet and a $20 million revolving credit facility for Comverge.

Raj Prabhu, Managing Partner of Mercom Capital Group, commented, “Mercom has expanded its reporting beyond venture capital transactions to include other types of financing and M&A transactions. This gives the industry a truer picture of what is happening in finance and M&A as it relates to solar, wind and smart grid.”
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April 12, 2010

Mercom Capital Group Releases Financing and Merger and Acquisition Report on Health Care IT for First Quarter 2010

Mercom Capital Group, llc, a communication and consulting firm specializing in health care technology and clean energy, today released the M&A, funding, and loan activity in Health Care IT sector for the first quarter of 2010. Disclosed investment in the sector totaled $82 million out of eight transactions. Health Care IT merger and acquisition (M&A) transactions in the first quarter was $618 million in six disclosed deals out of a total of 27 deals.



Forms of investment included venture capital (VC) funding, financing and loans, with VC investment coming in at $45 million in five deals and other financing and loans totalling $37 million in three deals. Significant investments in Health Care IT include a $30 million VC funding for PatientSafe Solutions Inc. and a $31 million credit facility for Harden Heathcare, llc.

Raj Prabhu, Managing Partner, Mercom Capital Group, commented, “Mercom has expanded its reporting beyond venture capital transactions to include other types of financing and M&A transactions. This gives companies a truer picture of what is happening in the world of finance as it relates in the healthcare IT sector. M&A activity was strong in the HIT sector as we are seeing the market consolidation happen.”
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March 15, 2010 - Mercom Exclusive

What Is Inside Your LCOE Assumptions?
By Alfonso Velosa III, Research Director at Gartner and Manhal Aboudi, Principal at Solar Consulting Center

Investors in the PV solar industry have worked to properly understand and price their solar projects, and thus determine the return on their investments. The PV solar industry has responded by moving the pricing discussion from a capacity basis to an energy generation basis. IE they have moved from a cost per watt conversation to a cost per kilowatt-hour. The cost of this energy generation is usually represented by an estimated “levelized cost of electricity” or “LCOE”. Yet, since the real purpose of the LCOE is to help price projects, it helps to be clear on what assumptions to have built into your LCOE. Otherwise, you may not have properly calculated your cost versus revenues or understood the magnitude of the margin of error in the LCOE estimate. And this will not just damage your portfolio - it will damage your reputation.

Levelized Cost of Electricity Formulas: Fancy Formulas for Simple Summations
In order to understand your LCOE, it is always a good idea to go back to basics. The basic formula to determine your LCOE starts with equating your costs and revenues. This can be represented in the simple formula below.

February 22, 2010

Does the European Debt Crisis Mean Anything to the Solar Industry?

I asked Al Velosa, Director of Research at Gartner, what the solar industry should watch for as the European debt crisis unfolds.
By Raj Prabhu

Do you see any impact from the current debt crisis unfolding in the European Union (Portugal, Ireland, Italy, Greece, Spain) on the solar industry....not to forget Germany was already forecasted down in 2Q?
This definitely raises the uncertainty in the industry as a whole. However, the central question is what impact it will have on the credit markets and interest rates. If we see government’s increasing their rates to finance their debt, it may have a ripple effect and increase the cost to financing PV projects.

Has the current debt crisis in the European Union made you rethink your solar forecast for 2010 in any way?
We have already trimmed our forecast for 2010 based on proposed changes for the incentive program in Germany. The crisis in Europe complicates the assumptions for our forecast a bit, but its central effect is to just lower the forecast a little more and to increase the error bars on our forecast for the year.

Is the current crisis bad enough to affect subsidies?
That depends on how the crisis extends throughout the region. However, remember that European governments have acted strongly to support domestic employment. So unless the budget crisis becomes so acute that most programs are cut, we should see the governments continue to support their current level of subsidies and the employment that they bring.

Are there any implications from the downward pressure on the Euro?
Between potential changes in interest rates due to government borrowing, the change in the Euro, and a bit of a drop in demand, we may see a stronger drop in average selling prices than we expected. Thus we could see a stronger increase in demand from developing geographies as they look at options to support both renewable energy programs and local employment.

Al Velosa is a Research Director at Gartner, Inc. focused on the photovoltaic solar market.

January 4, 2010

Greentech Investment Closes Strong in 2009

After some setbacks in the first and second quarter, venture capital investments in greentech saw its second best year in dollars invested and a record year for the most deals funded in 2009, according to Greentech Media.

The fourth quarter closed at $943 million invested in 100 deals bringing the total 2009 VC investments in greentech to $4.85 billion compared to $7.5 billion in 2008 and $3.5 billion in 2007. Solar was the top recipient with $1.4 billion in 84 deals followed by biofuels with $975 million in 44 deals.






This brings the total number of deals for all four quarters to 356, compared to 350 in 2008 and 222 in 2007.







Significant government funding from the American Recovery and Reinvestment Act (ARRA) was an important factor for 2009 and a trend that should be watched closely in 2010-2011. According to Department of Energy (DOE) just $1.76 billion, representing only 5.3% of awarded funds, has actually been spent as of December 25, 2009. DOE has awarded a total of $22 billion so far.



About Mercom Capital Group
Mercom Capital Group, LLC is a public relations, public affairs and market intelligence firm specializing in clean energy. At Mercom, we help clean energy companies build powerful relationships with media, analysts, government decision-makers and local communities. We arm our clients with timely market intelligence to ensure their competitive position and overall success. Mercom Capital Group is located in Austin Texas with offices in Bangalore India. For more information about Mercom Capital Group, visit: http://www.mercomcapital.com.

To get this and other important news and industry analysis, subscribe to Mercom’s popular market intelligence reports covering solar, wind and smart grid, visit: http://mercomcapital.com/market_intelligence.php

December 21, 2009

Mercom Exclusive: Recently, Raj Prabhu, Managing Partner at Mercom Capital Group, asked Al Velosa, Gartner Research Director, for his 2010 insight on the PV market.

Uncertainty Will Shadow the PV Market in 2010
By Al Velosa

As you look at the PV market on a global basis, there is a general wave of optimism as we have seen the general pick-up in demand. Germany spearheaded this drive with a great recovery in the past quarter, and will remain the world’s largest market in 2010. We’ve seen large projects installed in the U.S. in Florida, with promising project pipelines across the U.S. The Feed in Tariff in Ontario has demonstrated strong demand up in Canada.

Yet as I peer into my crystal ball for 2010 for the PV market, I see two core trends that will create significant uncertainty in the market and make the CEO’s of PV firms walk a tightrope between business development and supply chain management.

The first issue I see is continued issues with government incentives. There has been extensive discussion in the media about potential changes in German incentives in the middle of the year. Yet they are not the only issue. In the U.S. market we are looking at a dual set of incentive concerns. The more important tactical issue is the renewal of the grant program in 2010. The second is the passage of a national renewable portfolio standard by the U.S. government. It is hard for anyone to predict political compromises. It is hard to see how these issues will evolve in the U.S., especially as the Cap and Trade legislation appears stalled in congress. Other countries have had delays translating their legislation into implemented projects.

The second issue is the excess of capacity we see in the market. Despite Q4 demand, the current installed PV manufacturing capacity is significantly under-utilized. Especially if we look down into the Tier 2 and Tier 3 vendor plants. And this picture is further complicated by expansion plans that have been either ongoing or announced in the past quarter. Tier one vendors are in the process of adding well over a gigawatt of capacity through 2010. All this translates to an enhancement of the oversupply conditions we are in right now.

These two trends lead to a couple of key implications:

November 9, 2009

Mercom Capital Group Speaks About Global Market Trends for Utility Scale Solar at the TREIA Texas Renewables 2009 Conference

AUSTIN, Texas – Mercom Capital Group, LLC, an Austin-based public relations, public affairs and market intelligence firm, is pleased to announce that Raj Prabhu, Mercom’s managing partner, has been invited to speak at the 2009 Texas Renewable Energy Industry Associate (TREIA) conference held in Austin Texas at November 8 -10, 2009.

Raj will be speaking at the November 10 breakout session covering utility-scale solar. His presentation will specifically cover global market trends for utility-scale solar. The breakout session will begin at 2:20pm CST. The conference is being held at the OMNI Austin Hotel Southpark.

Copies of the presentation will be made available upon request by contacting Mercom Capital Group at info@mercomcapital.com.

About Mercom Capital Group
Mercom Capital Group, LLC is a public relations, public affairs and market intelligence firm specializing in clean energy. At Mercom, we help companies build powerful relationships with media, analysts, government decision-makers and local communities. We arm our clients with timely market intelligence to ensure their competitive position and overall success. Mercom Capital Group is located in Austin, Texas with offices in Bangalore, India. For more information about Mercom Capital Group, visit: http://www.mercomcapital.com. To get a copy of Mercom’s popular market intelligence reports covering solar, smart grid and wind, visit: http://mercomcapital.com/market_intelligence.php

October 5, 2009

Greentech investment climate showing strong signs of recovery
By Mercom Capital Group

Venture Capital investment in greentech looked a lot healthier in the third quarter of 2009 compared to the previous two quarters of this year according to a report by Greentech Media.

The third quarter closed with $1.9 billion invested in 112 deals compared to $1.2 billion invested in 85 deals in Q2 and $836 million invested in 59 deals in Q1. The dominant investment sector was solar with $576 million invested in 29 deals. Following solar was biofuels with $513 million invested in 17 deals and smart grid with $160 million invested in 14 deals.



Year to date the total venture capital investment in greentech stands at $3.9 billion and is already the second best year for greentech VC investing behind 2008. In 2008 total greentech VC investment was $7.6 billion and 2007 was $3.5 billion.



A huge factor boosting the third quarter greentech VC investment is the money flowing into clean energy projects from the American Recovery and Reinvestment Act. More than $1 billion has been awarded so far this quarter to clean energy projects through the recovery act providing a much needed boost of confidence to the investment community in general.

Data compiled from Greentech Media, Greenbeat, GTM research and DOE.

August 25, 2009

Mercom comments on healthcare IT stimulus winners at thestreet.com
Obamacare's Biggest IT Winners

President Obama has vowed to drag U.S. health care into the 21st century, allocating billions of stimulus dollars to streamline the nation's byzantine health systems. With big financial incentives being dangled in front of doctors and other providers, more than $20 billion will be spent on electronic medical records, the cornerstone of a massive health IT overhaul. Here are some of the stocks most likely to reap the benefits of Obama's ambitious health care agenda....

...Cerner and its rival Computer Programs and Systems (CPSI) are nonetheless well positioned, according to Raj Prabhu, managing partner of Mercom Capital Group, which specializes in health care research.

"Like McKesson, these guys are on the hospital side," he told TheStreet.com, adding that customers will soon know what systems they can buy. The U.S. government is currently laying out its criteria for what constitutes "meaningful use" of electronic records, according to Prabhu, who says that this should be in place in October or November... Click here to read the article in its entirety.

August 20, 2009

Clean Energy Companies Struggling to Keep up as New Incentives and Policies are Added Everyday
By Mercom Capital Group

For clean energy companies, wading through a maze of federal, state and local policies as well as financial incentives can be a very intimidating task. Yet it is absolutely essential in order to get to the next level of competitiveness in an extremely dynamic and fluid industry. Within the 50 U.S. states, there are currently over 750 varying financial incentives and over 350 different policies at the federal, state, county and local levels to be dealt with in order to stay competitive and take advantage of the opportunities available in the marketplace.

Developing a renewable energy project or starting and growing a clean energy company is a challenging task in today’s market conditions, with most companies dependent upon favorable policies and financial incentives in order to stay cost competitive.



In the first illustration, we demonstrate the perplexity of the various state policies and incentives that change almost daily. Having real time intelligence to keep track of the markets, incentives and policies is a must for any company looking to enter new markets and capitalize on the benefits these policies offer. "Beyond competitive products and technologies, clean energy firms that want to outperform in the US market will need a sophisticated public affairs and government relations program and savvy policy partners who are very familiar with the latest developments from the federal level all the way down to the county level," according to Gartner Research Director Al Velosa.

Raj Prabhu, Managing Partner of Mercom Capital Group, commented, “Along with federal and state incentives and policies, there are also local city and county programs that cannot be overlooked and requires constant attention. Of course, companies cannot make their decisions solely based upon policies and incentives without looking at market size and opportunity.”



In the second map, we have included the retail sales and retail electricity rates, providing a truer reflection of the overall markets. For example, Texas had a total of 344 million Mwh in retail sales in 2007 and is by far the largest energy market in the nation, larger than most countries. These larger markets demand attention regardless of current policies or incentives. Companies need to get into these markets early to begin building relationships and making a presence. Having a local presence and being part of the business community will allow companies to work from the inside and have a say in how the policies and incentives will be shaped the future.

Having a strong public affairs program, along with real time market intelligence that will deliver timely information about your markets and the policies that can affect your business is a must for clean energy companies that are looking to make an impact in these larger markets.

August 14, 2009

It’s Heating up in India - Highlights from the 3rd Renewable Energy India 2009 Expo
By Mercom Communications India Private Ltd.

The 3rd Renewable Energy India 2009 Expo held in New Delhi, India on Aug 10-12, 2009, had an impressive turnout from around the world. The event echoed the mood of the renewable energy industry in India, upbeat, yet uncertain. The participants were very excited about the future of renewable energies but were unsure about the effects of the global recession and the support the renewable energy sectors will receive from the Government of India.

Mr. Deepak Gupta, India’s Secretary for the Ministry of New and Renewable Energy, commented, “The Government is likely to roll out a plan to add 20 gigawatt solar-based power generation capacity by the year 2020. The solar mission has been approved in principle, now we have to work on the roll-out. Hopefully, we will go to the Cabinet in the next couple of months so we can roll-out the plan this calendar year.”

Indian companies are of the opinion that the investment interest in the industry is strong but government support is critical at this point. There were many Indian companies which commented that the demand in domestic markets for PV needed to be boosted rather than be dependent on the export markets.

There was a good showing of international companies looking to take part in the future of India’s renewable energy markets. The conference hosted pavilions for Germany and the U.S., and there was good attendance from companies representing China and Taiwan as well as a few other European countries. As expected, Solar was the predominant sector at the conference; however, representation of Wind companies was commendable.

From a regional perspective, Gujarat and Rajasthan were the two Indian states that stood out in their efforts to encourage the clean energy drive. Both of these state governments have laid out aggressive plans to bring clean energy to every household in their respective states.