Snjolfur Richard Sverrisson: 0:06

Hello listeners and welcome to the Monta weekly podcast bring you energy matters in an informal setting this week. We will discuss solar power in many ways. The sector is booming with over 400 gigawatts installed last year, over 50% more than the 2021 figure. However, there are some headwinds. Some countries have been curtailing solar production. Others are looking to prevent what they deem to be excessive permits. While recent moves. By Dutch suppliers to impose a levy on outputs to manage overproduction amid the potential for negative prices. Why is this happening and are there alternative ways to deal with the days and hours of high solar output so that such curtailments and levies? Don't threaten our green energy targets helping me, Richard Sarrison to discuss these issues and much, much more is Naomi Cheviard of SolarPowerEurope. A warm welcome to you, Naomi. Thanks for having me. Let's put this in context, what the current situation is, Naomi. China has installed more than 70 gigawatts of solar. This year, um, on the first six months of the year. What about Europe? Where are the where the hot spots? And where do you think development has been a bit too

Naomi Chevillard: 1:18

slow? Yes. So I mean, indeed, China had quite an impressive growth last year. I think it's more than 70% growth year on year. But in Europe, we also had a good growth. Last year, we had a bit more than 46 gigawatts in 2022. So that's a 45% growth. It's quite huge for for our continent. Um, when it comes to, uh, to trends, uh, we really have a couple of countries that are leaders. We have, uh, Spain and Germany in particular. So Spain was, uh, 8. 4 gigawatts and gigawatts of new solar last year. Um, and, uh, yeah, and Italy as well, uh, was, uh, also quite impressive. Spain and Italy in general were quite driven by, uh, rooftop tea markets, so quite interesting to see. We had this super bonus in Italy that was quite, uh, quite successful. Um, Germany remains the strong market because of the high governmental ambition. We have the... Uh, again, the Renewable Energy Act that facilitates permitting, um, and another interesting country that we see driving the market is Poland, uh, mostly for residential PV because in the larger rooftop PV market or the utility scale segment, we, uh, we still have difficulties with permitting and then, uh, where we're lagging a bit behind, uh, is, uh, Well, France in particular that actually decreased installation last year by 50% because we have slow, slow political support. We just adopted a law on on permitting that is that is a bit disappointing for the sector. And, and Portugal as well, where, uh, where the support to residential solar weren't, uh, as successful as we expected. How about the Netherlands?

Snjolfur Richard Sverrisson: 3:13

Is that somewhere in the middle?

Naomi Chevillard: 3:14

Yeah, the Netherlands has, uh, a good growth with, uh, 4, 4 gigawatts, uh, mostly, mostly rooftop PV. Um, now, of course, in the Netherlands, we have a number of concerns with, uh, with grid connections. Uh, the government has released a map of grid capacity. Uh, which indicates whether you can connect or not in a certain region of the country. And I think by now it's, uh, I would say a half or two third of the country that is, uh, in red. This is very

Snjolfur Richard Sverrisson: 3:44

interesting. I mean, I think we'll return to some of these countries later in the discussion, Naomi, but um, in 2023, do you expect us to exceed the 46 gigawatt that was installed last year? I mean, can we, the IAEA have said that we should, you know, we should be around 60 if we are to meet the targets that we put ourselves for

Naomi Chevillard: 4:02

2030? Yeah, I mean, it's, uh, it's... Still early, too early to say, of course. Uh, what, what we, uh, forecasted last year, end of last year is, uh, that we will hit the 50 gigawatt mark. Uh, what I can say for the moment is that, uh, we're, um, we're on the, on the right track, uh, in our global market outlook that we released that inter solar in, uh, was in June. Um, we, we, we were seeing almost all, all new countries increasing the solar market. So we're really on the. On the right track still with a big growth of Germany of Poland of Italy now, um, whether we will actually hit the 60 gigabyte mark remains to be seen and, and the development in the in Q4 this year will be will be critical.

Snjolfur Richard Sverrisson: 4:51

I mean, I, I think I should also take this opportunity to say that I have 12 solar panels on my roof as well. So, um, you know, uh, I'm not maybe in some ways not completely objective, but, uh, you know, so I'm, I have. Uh, this is in Norway where obviously in the summer months, it's been, uh, there's the production has been, been very good. Well, especially in June when it was sunny, but just to put that in there. So we, so we have the context, but, um, uh, you know, but if we want to talk about the headwinds, you know, me, um, you know, you know, I want to, to, to discuss the solar curtailment, um, where, where is this happening primarily? And why is it happening?

Naomi Chevillard: 5:27

Solar curtailment happens, uh, in general across, uh, across Europe because it's a structural tool. Used by especially distribution grid operators to manage them at work when they have a grid constraints, they use curtailment. We've been talking a lot about, uh, fancier ways to manage the grids with local flexibility markets or, uh, or time of use grid tariff. So, you know, like an economic price signal that would make a consumer react, uh, and, uh, and be flexible when the grid constraints happens. The reality is that DSOs are infrastructure managers and still use, uh, a lot of curtailment. Um, it's difficult to have data on, uh, on the volumes of curtailment. Uh, there was an obligation to report that is, uh, today, not, uh, uh, not really done. And we, we don't have a lot of data now. You probably, uh, read, uh, the news in April last year with, uh, early for this year, sorry, uh, with Czech Republic and Poland, uh, where the TSOs, um, the TSOs announced that, uh, that, uh, they would curtail massively, um, uh, solar, uh, because it was creating a, a threat to the grid. And here, I think in this particular case, the reason is that, uh, those countries still have a lot of inflexible power. Like coal, like nuclear, um, which is too expensive to curtail, whereas solar is, uh, is rather, uh, cheap to curtail. And on the other hand, an underdevelopment of, uh, flexible capacities, uh, for example, the battery storage, for example, demand response that could, Absorb the oversupply of solar power. And

Snjolfur Richard Sverrisson: 7:10

we saw even in Spain, I mean, I've seen some numbers of over 350 gigawatt hours curtailed last year. Have you got any up to date figures for Spain for this year?

Naomi Chevillard: 7:22

Unfortunately not. I wish we had more figures because it's part of monitoring the situation and understanding When, when, when congestion happens, when curtailment happens, because this is really what we need, understanding the, yeah, the, the situation now so that we can, uh, anticipate and, and take remedy solutions and, and maybe design, uh, yeah, uh, markets, markets for, uh, for curtailment instead of, uh, of, of slight, slight curtailment of solar.

Snjolfur Richard Sverrisson: 7:57

Because it seems, you know, a little bit crazy that you're, especially in countries like Poland, which has seen a massive rollout of solar power, but yet, when it comes to the crunch, they're allowing coal plants to continue to run and not the solar. I mean, doesn't that seem, some seems very, very odd to me, anyway.

Naomi Chevillard: 8:15

Yeah. I mean, the reason is that it's, uh, it's, it's sometimes it's too expensive to, to shut down and, uh, and restart, uh, cold plants. So, in a way, it's better to, uh, keep running the, uh, the cold plants and, uh, and instead curtail the solar power. Sometimes, uh, another reason is that you have, uh, some sections, geographical sections of the grids that are congested and you, you don't have the right consumers with the right, Uh, generators at the same, in the same area of the grid.

Snjolfur Richard Sverrisson: 8:47

So we're talking primarily the Czech Republic, Poland and Spain, or are there other areas where containment does

Naomi Chevillard: 8:53

happen? Honestly, it's, it's, it's really throughout Europe. Uh, it's, it's a measure. Now, the degree and the gravity of containment will depend on several factors. Again, Poland and, and Czech Republic, the, the issue. Is, uh, is the inflexible, uh, generation fleet. Um, in the Netherlands, uh, you might have a two, uh, two strong deployment of, uh, of solar and ev that, that congests the grids. In France, you don't have, uh, that much of an issue because the solar market is not as big, so rights. It really, it really depends on the, on the country.

Snjolfur Richard Sverrisson: 9:31

Absolutely. Um, and another, I mean, what's the alternative, Nomi, to curtailment in your view or solar power Europe's view?

Naomi Chevillard: 9:38

Well, one thing is to reinforce the grid, uh, for sure. And, and, uh, because If there is a grid congestion, it means that, uh, that there's probably a need to, uh, develop more cable or more grid infrastructure. Um, and that means, uh, that means better planning, uh, but also better investments. And in particular, one thing that the sector has been asking for is anticipatory investment. Instead of waiting for the congestion, waiting for the, the, the connection, having the, the grid operator anticipating all of these future congestions and investing a bit ahead. Um, another element is, uh, to develop flexibility solutions. So it's like a consumer switching off its, uh, electric vehicles at, uh, at noon, uh, to, uh, to, uh, switch it back on, uh, in the evening, for example, or battery storage. And here are two big elements. The first one is that when you install your device, um, it's already flexibility ready. So deploying the flexibility sources on the ground. Uh, incentivize the consumers to buy, for example, a smart EV charger or a house that's already equipped with, uh, digital controls. And the second thing is, uh, once you have all of this fleet of intelligence and smart devices on the ground, have the right economic signals, uh, instead of just, I have a congestion and I shut down the solar panels. Um, and, and here, how, how do you bring, how do you create these economic signals? There are a lot of good ideas, uh, we've seen, uh, uh, tariffs, uh, so smart tariffs, uh, explaining to consumers, for example, in California, you have a grid tariffs, um, where, uh, if you charge your vehicle, uh, during the middle of the day, during the solar peak, you pay a lower grid tariff than, uh, if you charge it at seven when you don't have a lot of solar. It could be just a signal on the radio, uh, or on TV, or it could be a fancy market where you have an operator that controls your installation for you and sends your, uh, so your flexibility.

Snjolfur Richard Sverrisson: 11:49

I mean, I, I'd certainly, um, vote for something along those lines. I think there'll be, if I had the opportunity to charge my EV at certain times or had the signals provided for me, I'd certainly do that. But, um, that's just my own personal opinion, but, uh, um, I think. Another factor that is of concern, I think, for, for you in particular, or the solar power Europe, is, is the, is negative prices and what that means for, for potential investments into solar power going forward. I mean, we've seen, uh, You know, an increased occurrence of negative prices, certainly in, in Northwest Europe, um, but also elsewhere. You know, in times of very low demand and high renewables output in particular, so Sundays, um, you know, is, is, is a key day there. But also other, other parts of the day and other times of the week. Um, what, what's your view here? Uh, Nomi, how is this impacting the expansion of, of, of solar, uh, both on rooftop, uh, at household scale, but also utilities scale? Uh,

Naomi Chevillard: 12:49

first, negative prices, I think, are here to, uh, the economic, uh, translation of a big change in the, in the electricity grid. Uh, and it's inherent to the transitional phase where, where we are, where it's, it's, again, it's, it's the same problem that, uh, we have, uh, lower demands and then, uh, high renewable generation and at the same time as, uh, uh, uh, an inflexible fossil generation that is too expensive, uh, to shut on and off. And so we'll, uh, have these generators bidding negatively. to be sure to be taken instead of, uh, of, of having to, to shut down. Um, so what does it mean? It means that we haven't yet found a way to, uh, to accommodate in this new electricity system in which we're living, where we'll, we'll still need some, uh, maybe some, some fossil assets for Uh, for a transition period or for very special cases, but with the bulk of our energy will be produced by, uh, by renewables. So it means that eventually we have to displace consumption during the middle of the day, or we have to find a way to storage, etc. So it's the same, the same type of, uh, of questions. Um, I think it will definitely change the, uh, the solar industry, uh, and impact it. The first thing is that, uh, developers will have to take it into account and forecast it into bids, very simply. You could also think that, uh, it's a big, uh, signal to, to innovate. And I think negative prices are not always seen as a negative thing. You were mentioning that you'd be happy to, uh, to, um, to sell, uh, the flexibility of your charger. There are a lot of consumers that are very happy to be paid to charge their car at noon. You know, it's also like, it's not a desirable feature of the market, but it's also a very powerful signal to, uh, to innovate. Now this said, um, you're right, that we, we need to, uh, to take care of that and we need to manage the transition and we need to manage the, the negative prices. Um, and here I think it's important to, to say that negative prices impacts on investments only. Only if you let them. Uh, negative prices are dependent on, uh, the current design of the electricity market we're in. Dependent on how contracts are different, so support schemes are, uh, are also designed. So it's important that, uh, uh, this is taken into account into the, into the power markets. Um, for, for existing, for existing support schemes, you already have safeguards in order to protect investors. So, for example, in, uh, in France, if you have, uh, too high a number of negative, uh, prices events, you get a compensation. Uh, in Germany, there is, uh, you, you, you can get, um, uh, you, you're not impacted by negative prices only if the negative prices last more than, uh, two, three, four hours. Um, and for the future, it will be, uh, it will be critical to think again about How we still give the price security, uh, for, uh, for solar investors while, um, while tackling negative prices and there's, there's been, for example, a lot of discussions on, uh, uh, remunerating, uh, uh, solar investors, not on, uh, um, not so much on the market prices, but more color related to the capacity. So, uh, so you get a financial investors to install your capacity on the ground, but you're not so much hit by the negative prices that happen day after day.

Snjolfur Richard Sverrisson: 16:35

I mean, it seems to be you, you've highlighted sort of patchwork of different sort of policies or measures across Europe. I know I'm in dealing with negative prices or how people cope. Is there a case for saying you should have some regulation at EU level?

Naomi Chevillard: 16:48

Um, yes and no, because I think, I think the EU can and already, uh, Does protect, uh, solar investors, right? The, there is, uh, there is a provision in EU law that says that you can't change the retroactively support scheme, um, that impacts negatively the economics of a solar project that was already commissioned. Um, and, and we can think of a number of principles that really protect, uh, so investors we're working on that in the current negotiations. Now, it's also important to, uh, keep a degree of flexibility. And, um, and leave still some room for, for the national states to, uh, to innovate and focus more on the exchange of, of best practices rather than a one size fits all solution.

Snjolfur Richard Sverrisson: 17:37

I mean, if I turn to the Netherlands, we talked a little bit about the Netherlands, uh, no, we know you, you, it seemed, uh, it's in a massive rollout of solar power. Uh, and in recent weeks, we saw some suppliers, um, looking to charge. Consumers that generate more than they consume, um, to compensate their sort of profile premium. What do you make of this? What's your view here? Is there a concern that this is, um, just the start of it, that this kind of action could spread to other areas, other markets?

Naomi Chevillard: 18:10

In that example, the problem is not the physics. The problem is the economics and the fact that the supplier doesn't get back, uh, it's, it's energy, uh, I mean, it's, uh, it's, we don't get his money back, basically. Um, so, so, yeah, I think what we need is to, uh, to develop new business cases. There are two things. Either you inject your electricity and you're able to, uh, sell it, value it on markets through, uh, through aggregators, so people that will, uh, aggregate your energy and sell it on markets for you, but we need to make sure that those new players that are significantly different from big normal players that operate, uh, uh, a nuclear plant or a gas plant can have access to the market and can show that they deliver electricity like, like others. Another interesting thing that we're working on is, uh, collective self consumption or energy sharing. It's, it's a scheme that was developed, uh, mostly in France, Portugal, Spain. Where, um, you, uh, you self consume electricity, not within your house, but, uh, within a certain segment of the grid. So, for example, under a substation. And that makes sense for the DSO because the DSO has an interest to have a sort of harmonious consumption and production under a certain segment of the grid. And in those business model, it's, again, an opportunity for suppliers to value local exchanges of electricity that at the same time make the, make sense for the grid.

Snjolfur Richard Sverrisson: 19:43

That's very interesting. So like, like a micro grid, I mean, I remember years ago, we were talking this in relation to the blockchain technology that sort of neighbors could trade with each other. And is that what you're talking about here, Naomi?

Naomi Chevillard: 19:54

Yeah, yeah, yeah, exactly. Exactly. It's a micro grid without having to, to have, to have micro, micro grids. Yeah. Within the existing grid? Within the existing public grids, yes.

Snjolfur Richard Sverrisson: 20:07

Interesting, interesting. I mean, what, what, in more general terms, what do you think, are there any regulatory hurdles to more, to the expansion of solar, both household and utility scale? Is there something that you'd like to see? What's on your sort of wish list, as it were, Naomi, that you'd like to see, uh, you know, you're, you're based in Brussels. What do you, what would you like to see the policymakers there put in place to, to, to incentivize further, further growth in the

Naomi Chevillard: 20:31

sector? My wish list, uh, Yeah, with the, I mean, the sector is, is going, um, is going quite well. Now I think the question is to, yeah, consolidating the growth in the, in the long term. Um, I mean, a first point was, uh, and still is really, uh, regulatory certainty. Uh, we've been through in the past now two years, um, through a period of significant uncertainty with on on the design of the electricity markets with the introduction of the those market caps, we already talked a lot about it. So so caps on the electricity price. That was impacting, uh, all of the contracts that were, that were derived from that electricity price on top of that, we had, it was a regulatory mess with countries, um, introducing their own measures, cooked at their own source and changing every three months. So it was, it was very messy. So keeping regulatory stability, uh, and keeping fundament, keeping fundamentals of the markets, um, is the number one, number one thing. Um, the second thing, uh, and the second challenge is really grids. So, uh, first, very statically being able to get your grid connection. Uh, on time and we have without too much hurdles and second, being able to inject your electricity without being, uh, turtled too much or without being cut too much. Uh, last, uh, another thing, last point is, uh, is permitting. Uh, we, we still have, uh, we still have some issues with permitting. It's still, uh, it's still complex. It's still difficult even to just access the lens that you need for, for your project. And, uh, and I think we shouldn't forget the element of skills, so... The amount of people we need to install projects, and I think it's a concern that the solar sector has as many other

Snjolfur Richard Sverrisson: 22:29

industries. I mean, if I can just sort of finish off today, Naomi, we're talking a little bit about kind of sort of innovation within the sector and ways to compact the issue of curtailments and negative prices. I mean, you've seen the kind of development or at least maybe it's still embryonic, I'd say, but the The hybrid PPAs, for example, where you have the solar PPA plus storage. Is that something that you think we'll see more of where so in a way of the markets finding a way to cope with these issues of curtailment and negative prices? Is that something you're seeing?

Naomi Chevillard: 23:05

Yeah, definitely. Definitely. Um, to cope with what you're saying, but also to, uh, to cope with the grid connection cost, because if you're able to store your peak production, uh, and displace it at other times of the day, you don't need as big of a cable basically. Um, so yeah, no, no, definitely that's something we're, we're really interested in. There's also hybrid projects, uh, solar and hydro, solar and wind that I think we'll see. Um, and, and yeah, we're, we're working on it. It's, I mean, it's, uh, it's very promising. We, we do need, uh, to talk about it, to educate, uh, PPA buyers to this kind of project. We do need some, uh, hybrid, uh, hybrid project senders, but. The real bottleneck is really the, the grid connection again, because, um, because we're not yet mature on, uh, what happens if you want to connect a solar and a storage together, or a solar and a wind together. It's in fact, as we speak, discussed in Brussels, uh, in a very technical regulation called, uh, Network codes. What happens? Can you can you calculate and make the assessments on both of the assets or one one assets after the other, which is quite burdensome. And the second thing is that if you get a grid connection for your project and you've operated your project for 10, 15 years, and then you want to hybridize it with, with storage. You don't do exactly what you want. Uh, and, and, uh, and it's, it's very burdensome to, uh, to be able to, uh, ask to connect a new asset to this. So what, uh, it's a very innovative, but like everything that is innovative in Europe, it's very difficult because it doesn't enter. The right, uh, the right case. Yeah,

Snjolfur Richard Sverrisson: 24:58

because because the regulation maybe isn't as flexible or but if I understood you correctly, Naomi, you're saying basically start with the grids, solve those kind of bottlenecks, but both physical and regulatory and then the rest will follow.

Naomi Chevillard: 25:12

Yeah, yeah, absolutely. And I think I think here we also need to it's exactly what you're saying. It's it's all about innovation, both in technologies and regulations. So it's really something that Thanks. We need to, uh, to streamline in, in energy regulation, allow DSOs to innovate, to test new things. The only thing is that we need the results. We need to advance. We need lower grid connection times. We need less curtailment, uh, et cetera. So green card to innovate. Perfect,

Snjolfur Richard Sverrisson: 25:40

Nomi. Thank you very much for being a guest on the Monta weekly podcast.

Naomi Chevillard: 25:44

Thanks for having me.