FREIBURG/BAARN – As prices are still going down each year and returns are still going up, the Dutch solar market will be able to compete with fossil energy generated from coal or gas without subsidy in 2020. ,,A major and exciting development that will change the entire economy,” says managing director Dr. Benedikt Ortmann of BayWa r.e., one of the major solar supply companies in Europe.
According to Ortmann the Dutch PV market is most attractive to foreign companies at this moment, especially because of the 12 billion of SDE+ subsidies for renewable energy, the government is granting this year. Other European countries have abolished such feed-in tariffs in the past years, but that’s no problem, Ortmann states. ,,I expect solar markets all over Europe to be subsidy-free in five years. Solar panels, inverters and other components have become so cheap that in some countries solar power is cheaper than coal or oil generated energy. In Spain and Italy we already have this grid parity. There solar can compete subsidy-free with fossil energy. In the Netherlands we will have it in 2020, just like Germany and the UK. Even Finland will reach grid parity, a bit later in 2025. That’s why I am sure solar energy will become the world’s most important source of energy.”
"That’s why I am sure solar energy will become the world’s most important source of energy."
Reaching grid parity paves the path for the merchant solar. This will occur when PV power plants are able to sell their solar power directly on the energy market. Ortmann: ,,Merchant solar is already happening in Spain. It is still developing but it’s coming. For the Netherlands I expect this will happen in 2020. It’s a matter of PV systems getting cheaper. If you extrapolate the prices of PV systems you will see they decrease by 10 or 15 percent each year. That’s why solar will be able to beat coal. If you build a new coal power plant the price of electricity will cost around 6 eurocent per kilowatt-hour. In Spain we’ve gone below 4 eurocents per kilowatt-hour with solar and in Germany below 6 eurocents. Merchant solar will change the whole economy. Many people don’t see all the consequences, but it will happen in three years. It’s exciting. Ten years ago I would not have expected it to happen so quickly.”
Due to the SDE+ subsidy more and more PV power plants are being built in The Netherlands. That’s why BayWa r.e. is eager to enter the Dutch market and is attending The Solar Future conference. The company wants to play a role in the increasing local market by developing, financing and building solar parks, varying from 10 to 100 megawatts. ,,We are preparing them for institutional investors like pension funds and insurance companies. For them the internal rate of return (IRR) of investing in solar varies from 5 till 8 percent, making it much more profitable than investing in bonds and much safer than investing in stocks,” Ortmann says. ,,Because The Netherlands have a strong economy, are politically stable and have the euro as a currency it is attractive for everybody to enter the Dutch market. The SDE+ subsidy however looks too good to be true. In addition, subsidies are not healthy for the energy market. In a couple of years they are not needed anymore. That’s why the Dutch government should create a smooth path towards grid parity.”
The name BayWa is short for Bayerische Warenhandels-Gesellschaft. The company was founded as a cooperation of farmers in 1923 and started supplying farmers with machinery, equipment, oil, gas, petrol and everything they needed. Although remaining a fossil energy trader, this century the company also stepped into renewable energy. In 2009 BayWa Renewable Energy (r.e.) was founded, a subsidiary of BayWa AG which became a leading supplier in solar energy, wind power, bio-energy and geothermal energy. In 2016 the company had a turnover of almost 1 billion euros and a thousand employees. Nowadays BayWa r.e. is one of the largest wholesale system suppliers in the European PV market, delivering any installation between 3 kilowatt-hours and 100 megawatts.
BayWa r.e. has already brought 1.7 gigawatts of renewable energy systems online, mostly in Europe, Asia and the America’s.
,,Our secret? We don’t go into countries and open offices there to compete with local developers, but we team up with them,” Ortmann says. ,,They know the local markets far better than we do. The difference with our competitors is that we don’t need a bank to finance the project. We built it on our balance sheet. So we are actively looking for Dutch project developers now to cooperate with them in this exciting market.”
The solar virus
Ortmann was working for a computer company in 2003 when he saw S.A.G. Solarstrom AG in Freiburg was looking for a CFO. ,,For me it was relatively clear from the beginning that solar systems in the end of the day are a financial product and building solar systems is a financial issue, while all the people in the company were looking at it from a technical perspective,” he says. He grasped the opportunity and dedicated the past fourteen years of his career to photovoltaic projects all over the world. Ortmann: ,,Once you get infected with the solar virus, you’ll never get rid of it.”