New Business Models Help Solar Power Companies Grow, Overcome Price Barriers

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Novel business models, such as on-site direct wire mini power purchase agreements (PPAs), will enable photovoltaic system installers to offer Solar Energy-as-a-Service, says new report.

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Implementation of novel business models is one of the key factors driving the growth of European solar power market, according to a Frost & Sullivan report.

The report revealed that the European solar power market, which saw a dip in 2016, recovered remarkably in 2017 by adding 8.6 GW of solar capacity.

This growth, as per the report, was largely driven by technological progress, cost reductions, and the development of novel business models such as on-site direct wire mini power purchase agreements (PPAs). This business model is particularly employed by large-scale solar project developers to overcome regulatory barriers.

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Additionally, the Frost & Sullivan’s recent analysis showed that the fully automated energy management across all sectors and segments on a local level and peer-to-peer models will facilitate new methods of financing.

Such business models when implemented will enable PV system installers to offer Solar Energy-as-a-Service, it said.

Reductions in subsidies can impact market growth

Noting that solar power generation is heavily dependent on government support, Irmak Giray, Research Analyst, Energy & Environment, said that reductions in subsidies and feed-in tariffs (FiTs), tax benefits, rebate programmes, and fund allocations will have a huge effect on the market.

For instance, he said, new capacity in the UK solar market showed a year-on-year decline of 53.8 percent in 2017, as the country had scaled back solar subsidy programmes. On the contrary, the markets in France and the Netherlands added capacity due to favourable support mechanisms.

“Regulations will cease to be an influential factor once prices start falling,” noted Giray.

“Economies of scale and increasing automation of production will accelerate price reductions in solar modules and installation, which will encourage prosumers. Furthermore, long-term contracts such as solar power leasing programmes and PPA will allow investors to reduce cost and risk by using clean energy,” the analyst added

The analysts are expecting participants in the highly fragmented solar market to start consolidating from 2018 to remain price competitive as well as foster collaborations among various stakeholders, including module manufacturers, energy companies, end users, and government organisations.

Frost & Sullivan’s analysis ‘European Solar Power Market, Forecast to 2025’ examines trends in the residential, commercial and industrial (C&I), and utility end-user segments.

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