Published on April 6th, 2015 | by Tina Casey6
Another Big Blow For Big Coal: Solar PPAs Coming To China
April 6th, 2015 by Tina Casey
China is already a global solar leader, but you ain’t seen nothing yet. The country is slowly but surely starting to march away from coal power, and a new development could turn that slow march into an all-out run. The renewable energy company UGE International has teamed up with financial experts Blue Sky Energy Efficiency to offer the first ever power purchase agreements to customers in China, and we’re thinking that could blow the China solar market wide open.
Power purchase agreements (PPAs) are old hat here in the US and elsewhere — they let you buy a solar array with no money down — but until now, according to UGE’s press materials, the vast PPA market for solar in China has yet to be tapped.
China Solar Market On The March
When our sister site Planetsave toted up a list of the six top solar users back in 2012, China didn’t even crack the list. For the record, Germany led the pack, with Spain, Italy, Japan, the US, and the Czech Republic rounding things out.
Well, the International Energy Agency’s 2014 global solar snapshot just came out last week, and as you can see from the infographic snippet above, China now tops the world, followed by Japan and the US. (That’s a snapshot of annual installations, btw.)
Currently, China is still building new coal power plants, but the rapid rise of the country’s solar industry puts it in a good position to transition over to where the US is right now. Coal still dominates the US but its share of the market has begun to shrink rapidly and there has been an almost complete halt to the construction of new coal power plants.
Power Purchase Agreements Are A Big Win For US Consumers…
The new UGE/Blue Sky partnership could play a key role in a similar transition for China.
For those of you new to the topic, PPAs are a basic financing instrument. With no money down for the installation of a solar array, the consumer gets access to clean renewable energy, typically at a lower cost than available from the conventional grid.
In exchange, the solar company gets free real estate — typically, your rooftop — to build their solar panels and collect the income from the energy they harvest.
Here in the US, PPAs are so mainstream that the US Department of Defense has been able to purchase hundreds of millions of dollars worth of solar power, all without harming any taxpayers.
That includes utility-scale, ground-mounted solar arrays such as the “30 x 30” solar project for three bases in Georgia totalling 90 megawatts, as well as a billion-dollar series of small-scale rooftop solar arrays for military housing around the country.
Contrast those low-risk deals with recent US coal power projects like the Prairie State Energy Campus in the Midwest, which is sucking millions out of local economies due to cost overruns.
…So What Took China So Long?
China has a lot of catching up to do in the PPA market and I have no idea why. If you have an idea why, drop us a note in the comment thread, but if the UGE/Blue Sky venture is successful, that could be a moot point in just a few years.
The new China solar venture will cover commercial and industrial customers, leveraging one of the main attractions of PPAs, a “turnkey” solution. That means the solar developer and its financing partner take care of everything, from pre-approving loans for qualified customers, to vetting local installers, shepherding the installation through any necessary permits and inspections, and connecting to the grid or microgrid as the case may be.
In a press release announcing the new deal, Tienyu Sieh, CEO of Blue Sky, noted that in addition to getting lower electricity rates, the benefits of solar for commercial and industrial customers also include long-term price stability and predictability, as well as a giant Kewpie doll on your corporate social responsibility balance sheet. (If you don’t know what a Kewpie doll is, never mind, just go out and buy yourself a cigar).
Wait — Is That The Same UGE?
If UGE rings a bell, you are probably thinking about the Eiffel Tower, which just recently got itself decked out in two brand new UGE micro wind turbines.
UGE is better known for its wind energy ventures, and you can expect to hear even more from the company on that score. It has been working with the US Energy Department to become one of the first micro wind manufacturers to score a coveted third-party performance certification.
UGE already has a toehold in the China micro wind market, so stay tuned.
Image Credit (screenshot, cropped): Courtesy of IEA.