During the 2010 Solar Power Finance & Investment Summit in San Diego, a large crowd learned that Chinese companies have cash and interest in the US solar energy market, yet partnerships require patience and low risk.

To explore the opportunities, R. Thomas Hoffmann, Partner with Ballard Spahr, led a panel with three experts on Chinese solar investing. They were:

• Jimmy Chuang, is with GCL Solar, the largest polysilicon producer in Asia and the largest solar developer in China.  GCL has access to $4.5 billion.

• K. Scott Son, Vice President of Project Finance at Suntech, the largest producer of silicon PV in the world (nearly $2 billion in revenue in 2008).

• Sha Wang, Principal at Cybernaut Investment, a family company with US and Chinese roots and a $500 million solar investment fund.

Low Risk, Stable Returns
All three panelists agreed Chinese companies are looking for equity investments in the US, and that solar offers an attractive way to diversify their portfolios.

Sha Wang explained there is a low tolerance for risk among Chinese investors, so her company looks for fixed income-like returns of 10-20 percent. The fact that the US does not have feed-in tariff programs makes this market much more complex and difficult to predict returns compared to European investments. The speakers also stressed that they want good management teams that can execute successfully and demonstrate a good track record.

Consensus: Joint Ventures Never Work!
During the session, the panelists offered advice to potential US business partners:

• Educate investors. Chinese investors are often surprised by the complexity of the US capital markets.  K. Scott Son advised that, “developers need to vet investors and provide significant education.”  Jimmy Chuang added, “the complexity of the US market implies that the education process could take as long as a year.”

• Present low-risk deals. Chinese companies either do not have an appetite for tax write-offs, or are not eligible for US tax credits.

• Align with the company goals. Take time to understand how investors generate income and where they are going. For example, many investors are also module manufacturers; in the case of Suntech, it is looking for partners who can help them sell more panels. To achieve this goal, Suntech has a $20 million solar project development fund to facilitate partnerships.

• Learn about how capital can get out of China. China has currency control and complicated rules regulating how money leaves China.

• Be patient. Sha Wang stressed: “Patience is key. If you don’t have patience, I don’t suggest you partner with a Chinese company.”  However, K. Scott Son provided a jovial counter to the caution by adding, “unless you want to work with Suntech.”

• Concentrate on PV. Currently, Chinese companies are interested in crystalline PV.  They are less interested in — and know less about — concentrated solar power and solar thermal.

• Provide exclusivity. Pipeline exclusivity is a must.  K. Scott Son reminded the audience of a photo op with President Obama highlighting a SunPower project where the President is standing in front of Suntech panels.  “We must have exclusivity.  It would be a PR nightmare for us to invest in your company, yet you later use Trina panels in the project.”

• Don’t do a joint venture. All three panelists shook their heads and said, “joint ventures are very hard to make work.  Especially when they are 50/50.”

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photo: Posh Living, LLC

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GE just invested in them. Now, Guy Sella, founder and CEO of Israeli company SolarEdge, is planning a revolution. Don’t be alarmed though, this one isn’t dangerous. His goal is to transform the way photovoltaic systems are now operated, in terms of efficiency, safety and cost.

“People haven’t been looking at photovoltaic systems from a holistic point of view,” Sella tells ISRAEL21c. “Panel manufacturers care only about the panels and panel conversion efficiency. The people that develop classical inverters only care about the efficiency of the inverter. I asked: can we create a system that is better than we currently have?”

The answer, according to SolarEdge, is yes. The Herzliya-based has created “intelligent panels” that work together with a central Power Box, which would replace the passive panels that are the current norm. These new panels provide 25 percent more energy as well as solutions to some of the serious problems that plague current systems.

No feedback, no function

Today’s photovoltaic systems have a number of major disadvantages, according to Sella. For instance, there is no feedback from individual panels. If a panel is broken or not functioning properly, there is no monitoring system to detect the problem.

“In fields today you have hundreds of thousands of panels,” says Sella. “Even if some of them are not working, they don’t have any monitoring level, so you as the field owner can’t know if they are working. After a big hailstorm, people habitually walk through the field with a notebook, visually checking each panel and writing down its condition.”

Another problem with having no monitoring system is that people can easily steal the panels, which are worth between $600 to $800 each. These antediluvian conditions would be abolished by SolarEdge’s technology.

Turning passive panels into intelligent devices

In current systems, all the panels in a photovoltaic system are connected to an inverter box, which in turn connects the system to the power grid. SolarEdge, however, has taken all the technology in the inverter box and put it into an electronic chip, or ASIC.

Each photovoltaic panel contains its own ASIC chip, turning each panel into an electronic device that can alert the owner both to its functionality and possible theft. The system will also be connected to the internet, so the owner can go online to check the status of each panel.

These intelligent panels also provide more energy than current photovoltaic panels. “The panel can now optimize its energy output, and can verify that it is converting the maximum energy that it has,” explains Sella.

An additional advantage is that the very different voltage system created by this technology is much safer, says Sella. Current systems use thousands of volts in their DC lines, and are impossible to turn off, a serious hazard in cases of fire. The inability to shut off powerful voltages also makes these systems potentially dangerous to install.

With the SolarEdge system, the panel-embedded electronics can be shut down individually, either through the central power box or via the panel itself.

An excellent rate of growth

Confidence in SolarEdge is high. Founded in 2006, by Sella and co-founders Yoav Galin, Lior Handelsman, Meir Adest and Amir Fishelov, who met in an elite technology unit of the Israel Defense Forces, the 70-member company has raised $23 million in the past year, despite the poor economic climate.

It plans to start shipping products from mass production lines in Israel late this month.

“SolarEdge has partners all over the globe – in the US, Germany, Spain, France, and Japan,” explains Sella. “Through our partners we have access to 40-50 percent of the world market, which is basically wherever there is solar energy.”

This market is in the range of $30-40 billion; and Sella estimates that the worth of his own product is somewhere in the region of $3 billion.

Not surprisingly then, Sella is optimistic about the solar energy market even in the current recession. “The growth rate of the solar energy market makes it interesting. I’m not aware of any market since bubble days that has had this level of growth rate,” he says.

Eventually, Sella predicts, “Solar energy will be cheaper than fuel cells, and energy harvested from photovoltaics will either be cheaper or the same as fossil fuels.”

Article by Ilana Teitelbaum appearing courtesy of Green Prophet; first published on ISRAEL21c

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Green businesses in the San Francisco Bay Area abound, and green professionals are fortunate enough to be offered an array of green events they can choose from at any time. As editor of green media outlet CleanTechies, I particularly like one event that is taking place tomorrow. The Green Chamber of Commerce and law firm Wendel Rosen are co-sponsoring a panel on “Practical & Legal Considerations for Communicating Your Message” – an event that no green communicator would want to miss (at least in my opinion). Personally, I think it’s a fabulous idea to get green media leaders together, and I trust William Acevedo from Wendel Rosen will do a great job moderating the panel, which includes the following leading local green media experts:

Tuesday, May 19, 2009
Practical & Legal Considerations for Communicating Your Message
Where: Environmental Defense Fund, 123 Mission St., 28th Floor, San Francisco, CA
When: 6:00-8:00 pm

• Emilie Cowan – Ecofabulous, Inc.
• Melissa Mansfield – Green Gorilla Media
• Daniel B. Myers – Wendel, Rosen, Black & Dean LLP
• Lauren Selman – Reel Green Media

It’s $10 to attend for members and $15 for non-members if you pre-register, otherwise it’ $5 more at the door (proceeds go to the Green Chamber of Commerce). To pre-register, send an email to: melinda (at) greenchamberofcommerce.net

Hope to see you there!

Check out the CleanTechies Calendar for more events!

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