NrgEdge interviews Sam who is the founder of Solar Horizon with its aim to harness Singapore’s solar potential. A passionate advocate of solar energy, Sam is considered among the top Solar PV leasing experts in Singapore.
1. Can you tell us about how Solar Horizon came about and the process of creating the team?
I’ve been in the solar industry for about 8 years, I started out at SolarWorld, the German panel manufacturer handling the Indian market for large scale power plants. A few years into the journey, I felt that the supply models were without any value-add in an extremely price competitive market such as India and general Asia – it was a losers’ business module. We had to really look at innovative channels to market. In those days, between 2012 – 2013, the solar leasing model in the US was growing, such as the solar city that was built by Elon Musk. When we looked at that, we thought, why can’t we do that here in Asia? Initially when I was with SolarWorld, I developed a business model with the sole intention of selling the panels as part of the business strategy and to create investment opportunities for the company. We managed to get a few projects in place but SolarWorld’s appetite was only in the business of selling modules and they were not interested in investing. I thought this was not going to work, because if suppliers wanted to create long term value-add and were not willing to budge on price, then this would not be a feasible long-term business model. If you look at today where the biggest solar companies are at, including SolarWorld, I believe that became true.
After I decided to leave SolarWorld, I joined a small startup in India to do this business model. But about a year in, I realized that the Indian market is an extremely challenging market in terms of regulation and contract enforcement and it is controlled by the various “big boys”, the existing giants in the industry. For this business model to work, we needed to work in great parity market where we have a stronger reach, a better enforcement structure and since Singapore was home for me for the last 20 years, I thought it would be wise to come back to Singapore. In late 2013, Singapore’s power prices was quite high. And it was the first big boom of solar where the government announced the Solar Nova program and so on. We, along with many other new entrants rode along this wave.
I was looking for guys who could help me sell and market to get some deals. I initially tied up with Kyle and Saagar who were the two original partners. We set up Solar Horizon with a focus on smaller projects with a 1kWp range but we quickly recognized that we were quite strong in business and project development, so we began our first projects in Roha, Kapoor and FT Group. At that time, my current partner and current co-founder Andrew Zhang came on board to Solar Horizon. We were childhood friends for over 20 years, and he had been in Keppel for the past few years. He saw the company’s progress he was excited about the business model, so he came in as a full-fledged partner. Essentially from that point onwards, it was Andrew and myself as the main partners, with Kyle and Saagar as co-founder and support staff. Our team formed organically over time and we were a sort of band of brothers and entrepreneurs who came together for a common passion and dream. Over the years, the team has evolved, Andrew and I are the main partners and the rest of the team are spread out in the region. We have built a pretty lean organization, where Solar Horizon Singapore is the nucleus, and we have built an extensive ecosystem of partners, suppliers, Engineering, Procurement, and Construction (EPC) contractors, clients, investors, etc. So our team has grown from a small group of entrepreneurs to a large ecosystem of partners from different parts of Singapore. The team has expanded laterally, and we work with 6-7 consortiums.
2. Since Solar Horizon’s inception in 2014, do you see a significant boom in the Renewables energy workforce? What skillsets and qualities do you look for in a team member?
There has already been a boom and bust cycle – as it’s an emerging industry, it is quite nascent. I think that the second boom is starting now. There was a huge boom when the Singapore government was promoting solar and oil prices were very high and the power prices were high as well, therefore the attractiveness to the solar market was there. But when the oil prices crashed, Singapore’s wholesale Power crashed, and the economic attractiveness of solar was decimated over 3-4 months. It’s quite tough and a number of our colleagues in the industry are no longer around. And now, what’s happened is that the developers who are still in play, including us, should enjoy a pretty good upturn within the next 12-18 months.
There is a huge amount of people looking to get into the renewable energy industry. As a recently graduated startup who’s now moving into SME business, we look at a few different things: we look for those who are hungry and eager to learn, self-starters who don’t need to be constantly hand-held – as the project development business is quite entrepreneurial and there’s a lot of late hours and traveling involved. There’s not necessarily a “corporate structure” because project development is quite a volatile business. We also look for those with an entrepreneurial mindset and those who like to take initiatives. I don’t expect these young professionals to have a fully trained solar background but what we do expect is that they are willing to learn and put in the hours so that we can train them to do the financial modeling, build marketing proposals and contracts and so on. We operate a little differently because we’re the “underdogs” in the industry. We’re a group of entrepreneurs who are taking on the “big boys” so we look for people who can put on a good fight and take rejection well because we do hear a lot of “No’s” in the industry. Those who can grow stronger and be resilient are those who will be successful in their careers.
3. What has been your greatest achievement – personally and from the company’s perspective?
To be honest, it’s not about the megawatts that we’ve built or the deals that we’ve got – for me, I don’t believe numbers define success. My personal biggest success was my learning and growth over the last several years of having established Solar Horizon from essentially nothing. From a one-dollar company to a multi-million dollar business, the growth pains and the learning curves that we’ve endured – my single biggest achievement has been the resilience, growth and learning that we have held on in the tough times and being able to establish ourselves as a meaningful brand in the rooftop space in the region.
For the company, I think we have had a couple of successes – one of the biggest achievements is winning a 4MW project in the Philippines as part of our diversification strategy. We kind of went in there without knowing anybody and within a year and a half, we managed to secure and win this large contract which we later sold to one of the investors. Another achievement for the company is our ability to repeat in scale in the region. Having learned the hard way on how to make this business work correctly, and make bankable and sustainable projects where our clients, investors, partners and ourselves benefit – this has certainly been one of our defining hallmarks.
4. Would you say that your previous working experiences helped you in getting where you are today? Did the relationships and connections you formed in those early years help you?
Absolutely 150 percent. With my four years of working hard as a salesperson in SolarWorld and being able to attend a 10-day course at MIT in Boston in creating greentech ventures, all of that groundwork was instrumental in helping me set up Solar Horizon. I developed the expertise and knowledge in my formative years. If you’ve heard of the 10,000 hour rule (the principle coined by Malcolm Gladwell that holds 10,000 hours of "deliberate practice" are needed to become world-class in any field), I probably clocked in seven or eight thousand hours in the last several years. The network and relationships I formed during those years also helped in building my business. Another thing that really motivated me was when people said “No you can’t do it!” for going into project development business in the industry. Every “No” and rejection made us stronger and more determined which helped us in setting up Solar Horizon and being successful in the business.
How we manage relationships? We focus on win-win-win. That is our philosophy. We focus on building eco-systems that can run on autopilot. We don’t think that any single party can do it alone. Our strength is bringing in specialist players who are very good at their individual piece of the value chain, which creates an eco-system where everybody around it benefits. We are looking to create long-term partnerships that create value in harnessing energy in underutilized space sitting on our rooftops. We also focus on empathy – putting ourselves in our clients’ shoes. We have learned to create a more systematic customer journey. Finally, when you bring in a consortium together, 1 plus 1 has to equal greater than 2 – this is where the value-add comes in. We pride ourselves on creating more value than the sum of parts, which is why our clients come to us.
5. In one of the talks you gave back in 2014, you mentioned the key risks in the industry which are 1) Technology risk, 2) Off-taker risk, and 3) Energy yield projection. Do you believe these risks still stand today, or are they any different? Can you elaborate?
Things have changed a lot since then. In any emerging industry, the rate of change is faster than others. Technology risk has now reduced significantly. Solar is now a proven technology and works in large scale. There have been installations that is working for almost 20 years and you can see its lifecycle. There’s been a huge efficiency in solar panels so you can put more power in the same space. And there has been a huge cost drop as the technology matures. With the low technology risk, it has affected the workmanship of panels. Since the solar industry has exploded, every Tom, Dick and Harry think they can easily go into business. I think quality control and EPC in installation is now a bigger risk than the actual technology.
On the other hand, off-taker risk has evolved but in the opposite direction. Previously, when Solar first boomed in Singapore, we were offering PPA to all kinds of clients without much KYC (Know Your Customer). What we learned is that most investors are not willing to take 20 years risk for anything more than double their company. Now we are more selective with our clients and focus more on the premium sector of the market such as MNC, corporate PPA, triple A-rated companies.
For the energy yield risk, this is tied to the first point. If you have a great panel but terrible EPC, your energy yield will be lower. Some of the players in the market are doing it “cookie cutter” style by integrating different contractors on different pieces of the value chain. When you do that, you improve your cost but you reduce your quality and therefore reduce your yield. At Solar Horizon, we have a different approach given that our business is to maximize and optimize rooftop space by generating the highest yield possible, we provide only high quality offering. We do not go for “mainstream”, quasi-branded products and we offer very high Performance Ratio (PR) guarantees and much higher yield guarantees than the market. By ensuring high quality control, by working with EPCs which we have long-term relationships, then we are able to offer a higher energy yield guarantee.
6. As Singapore is restricted in terms of space and land, how else do you think solar panels can be installed in the city? There are some studies being conducted to ‘hang’ the panels as well as installation on water surfaces such as the pilot test of 10 floating PV systems at Tengeh Reservoir.
There are a few points I’d like to raise. 1) There is actually a lot more rooftop space in Singapore than people imagined. We do have potential of over 1GW of installed capacity. And 2) companies are driven dollars and cents. I find that most companies will not take on solar unless it has an immediate economic benefit. With that in mind, hanging solar panels is not going to be efficient as you’ll only get half of the sunlight yield. In addition, the installation costs will be frightfully expensive and the technology put on the buildings will have much lower efficiency. And lastly 3) floating installation actually makes sense, from a theoretical perspective. However, the cost of installation is at least 50% higher than installing on a rooftop.
So these things may sound and look nice, but it is not practical. It’s more of a gimmick. What we at Solar Horizon think will work in Singapore is the mobilization of the electricity market and offsite PPA (Power Purchase Agreement) model where you generate power in Point X and pump it through the grid and sell it to a client in Point Y. For the next few years, I believe the rooftop installation of solar panels to supply energy directly to the customer, exporting the excess through the grid, perhaps having a bilateral contract to export elsewhere – these should work to sustain Singapore.
7. One of the key technical challenges of solar is the intermittency of electricity production. To address this, we need reliable and cheaper battery solutions that can be well integrated with solar systems. Do you a see gigafactory being built in Singapore or anywhere in Southeast Asia within the next decade?
Firstly, Singapore has 100% grid reliability. We actually have 13GW supply against the 6GW demand, which means we have 60% excess power in our grid supply system. There are very few rooftop systems that can supply more or all of the load to customers. I don’t believe that intermittency of solar power is an issue at all for Singapore.
Secondly, when you have such a massive over-capacity and low prices, why would you want batteries and go off the grid? We have such a good, robust system and we believe in working hand-in-hand with the grid. I don’t see us needing to build a gigafactory any time soon in Singapore.
Thirdly, when we’re talking about Southeast Asia, that’s where the market gets more interesting. We have done micro hybrid systems in the Maldives and we’re exploring larger scale in Philippines and Indonesia. In these markets where you may not have grid availability, then having a mixture of solar, diesel and storage makes a lot of sense. You can have continuous power on micro grid systems. As the price of storage increasingly lowers, for us, we have one very keen eye on it, we are monitoring the development and particularly the cost of technological advancements – we see that it will be appropriate for smaller systems initially in more flat land areas such as resorts in the Maldives, off-grid islands in Indonesia, etc. But in terms of a gigafactory, I don’t see that happening in SEA anytime soon because there is already a lack of raw materials and the big players like Tesla is already monopolizing the supply. I think it is an important development and can be useful for smaller systems in remote areas in the region. But it may take 4-5 years until there is enough demand to build one.
8. What major changes or developments do you foresee in the industry in the next 10 years?
I think the solar industry’s strategy will evolve in a more dynamic way in Singapore. I think Singapore will be more focused on integration of solar energy with blockchain, or integration of solar with offsite PPA, or bundling with retail offerings. I see solar integrating in a wider energy strategy, being hand in hand with energy efficiency, urban farming, etc. Singapore will be a showcase platform for regulatory advancement, technological innovation, testbeds and R&D. It is important that we in Singapore set an example to the region and export our expertise and knowledge.
9. How soon do you think that renewable energy industry will replace fossil fuels as the main energy source to power the economies in this region?
As the price of solar is currently so low (1.77 cents per kilowatt-hour), it is a no brainer for solar and renewables. If you look at the state arms at Norway, they are looking to divest $30 billion in fossil fuel shares and holdings. So the move is already starting. Over the next 20 years, renewable energy will become the dominant force. However there are technical and regulatory challenges. The utility players have spent billions over decades putting up the infrastructure and transmission lines on which they have made windfall profits because of their monopolies. When distributed generated energy is growing, that means that people will no longer need to depend on the central grid. When you introduce the blockchain, you no longer need the grid to account and transact which is a game-changer. So the revolution of energy will be digital, distributed and it will be smart. A company such as Solar Horizon who are lean, innovative and creative, are staying at the forefront by making sure that a number of our projects can accommodate the integration of technology, blockchain and energy efficiency. So when the industry explodes in that direction, we’ll be ready for it.
10. For an entrepreneur who is considering a business in Solar industry, what advice or tips can you provide him/her?
Figure out your niche and what you’re good at doing. Find out what kind of resources you have access to. If you want to go into large scale power plant development and construction, you’ll need a lot of capital. If you want to enter the solar operation and maintenance spaces and offer services, you need good engineers on board. Think about business model innovation – not every startup has to invent a new technology or invention, you can be creative and innovative. Talk to a lot of people to get a lot of ideas. Try to do something that has not been done or if it has been done, figure out how to make it different. Luck and timing are also important – get into the market at the right time.
11. Tell us more about Solar Horizon. What’s next in the pipeline for your company?
We’re going through a rebirth because it’s been a tough past year which shook us and our competitors. We almost got acquired early this year but we pulled out of the acquisition to maintain our independence, creativity and agility. What’s next for us? We are being very strategic and targeted, moving our focus away from mainstream to a niche, premium segment. We’re looking to repeat in scale a few key markets, and looking to stay focused on the PPA business but for now slowly but surely starting to put a concrete high on how we can integrate emerging technologies to make our offering more competitive. We are looking to scale the next 2-3 years and our project sizes are greatly expanding so this is the time for Solar Horizon to put into practice everything we’ve learned the hard way, to establish ourselves in a larger scale environment but still remaining niche and focused.
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According to 2018 data from the U.S. Energy Information Administration (EIA) for newly constructed utility-scale electric generators in the United States, annual capacity-weighted average construction costs for solar photovoltaic systems and onshore wind turbines have continued to decrease. Natural gas generator costs also decreased slightly in 2018.
From 2013 to 2018, costs for solar fell 50%, costs for wind fell 27%, and costs for natural gas fell 13%. Together, these three generation technologies accounted for more than 98% of total capacity added to the electricity grid in the United States in 2018. Investment in U.S. electric-generating capacity in 2018 increased by 9.3% from 2017, driven by natural gas capacity additions.
The average construction cost for solar photovoltaic generators is higher than wind and natural gas generators on a dollar-per-kilowatt basis, although the gap is narrowing as the cost of solar falls rapidly. From 2017 to 2018, the average construction cost of solar in the United States fell 21% to $1,848 per kilowatt (kW). The decrease was driven by falling costs for crystalline silicon fixed-tilt panels, which were at their lowest average construction cost of $1,767 per kW in 2018.
Crystalline silicon fixed-tilt panels—which accounted for more than one-third of the solar capacity added in the United States in 2018, at 1.7 gigawatts (GW)—had the second-highest share of solar capacity additions by technology. Crystalline silicon axis-based tracking panels had the highest share, with 2.0 GW (41% of total solar capacity additions) of added generating capacity at an average cost of $1,834 per kW.
Total U.S. wind capacity additions increased 18% from 2017 to 2018 as the average construction cost for wind turbines dropped 16% to $1,382 per kW. All wind farm size classes had lower average construction costs in 2018. The largest decreases were at wind farms with 1 megawatt (MW) to 25 MW of capacity; construction costs at these farms decreased by 22.6% to $1,790 per kW.
Compared with other generation technologies, natural gas technologies received the highest U.S. investment in 2018, accounting for 46% of total capacity additions for all energy sources. Growth in natural gas electric-generating capacity was led by significant additions in new capacity from combined-cycle facilities, which almost doubled the previous year’s additions for that technology. Combined-cycle technology construction costs dropped by 4% in 2018 to $858 per kW.
Fossil fuels, or energy sources formed in the Earth’s crust from decayed organic material, including petroleum, natural gas, and coal, continue to account for the largest share of energy production and consumption in the United States. In 2019, 80% of domestic energy production was from fossil fuels, and 80% of domestic energy consumption originated from fossil fuels.
The U.S. Energy Information Administration (EIA) publishes the U.S. total energy flow diagram to visualize U.S. energy from primary energy supply (production and imports) to disposition (consumption, exports, and net stock additions). In this diagram, losses that take place when primary energy sources are converted into electricity are allocated proportionally to the end-use sectors. The result is a visualization that associates the primary energy consumed to generate electricity with the end-use sectors of the retail electricity sales customers, even though the amount of electric energy end users directly consumed was significantly less.
Source: U.S. Energy Information Administration, Monthly Energy Review
The share of U.S. total energy production from fossil fuels peaked in 1966 at 93%. Total fossil fuel production has continued to rise, but production has also risen for non-fossil fuel sources such as nuclear power and renewables. As a result, fossil fuels have accounted for about 80% of U.S. energy production in the past decade.
Since 2008, U.S. production of crude oil, dry natural gas, and natural gas plant liquids (NGPL) has increased by 15 quadrillion British thermal units (quads), 14 quads, and 4 quads, respectively. These increases have more than offset decreasing coal production, which has fallen 10 quads since its peak in 2008.
Source: U.S. Energy Information Administration, Monthly Energy Review
In 2019, U.S. energy production exceeded energy consumption for the first time since 1957, and U.S. energy exports exceeded energy imports for the first time since 1952. U.S. energy net imports as a share of consumption peaked in 2005 at 30%. Although energy net imports fell below zero in 2019, many regions of the United States still import significant amounts of energy.
Most U.S. energy trade is from petroleum (crude oil and petroleum products), which accounted for 69% of energy exports and 86% of energy imports in 2019. Much of the imported crude oil is processed by U.S. refineries and is then exported as petroleum products. Petroleum products accounted for 42% of total U.S. energy exports in 2019.
Source: U.S. Energy Information Administration, Monthly Energy Review
The share of U.S. total energy consumption that originated from fossil fuels has fallen from its peak of 94% in 1966 to 80% in 2019. The total amount of fossil fuels consumed in the United States has also fallen from its peak of 86 quads in 2007. Since then, coal consumption has decreased by 11 quads. In 2019, renewable energy consumption in the United States surpassed coal consumption for the first time. The decrease in coal consumption, along with a 3-quad decrease in petroleum consumption, more than offset an 8-quad increase in natural gas consumption.
EIA previously published articles explaining the energy flows of petroleum, natural gas, coal, and electricity. More information about total energy consumption, production, trade, and emissions is available in EIA’s Monthly Energy Review.
Principal contributor: Bill Sanchez
It was an innocuous set of words published in a newspaper in Germany on Sunday. “I hope the Russian do not force us to change our position on Nord Stream 2”, the German Foreign Minister Heiko Maas was quoted as saying. A day after that, Angela Merkel also issued a single sentence: “The German Chancellor agrees with the Foreign Minister’s comments from the weekend.” Simple words with a bold message. And potentially devastating consequences.
The incident that hardened the hearts of Germany , which had become increasingly isolated over the issue of the Nord Stream 2 natural gas pipeline that connects Russia to Germany through the Baltic Sea, was the hospitalisation of Russian opposition leader Alexei Navalny. Airlifted to Berlin following a medically-induced coma, German doctors concluded that Navalny, who is no stranger to intimidation tactics by the Putin government, was the victim of the Novichok nerve agent. If that name sounds familiar, that’s because it made headlines in 2018 over the attempted assassination of former Russian spy Sergei Skripal and his daughter Yulia in Salisbury, UK. A lethal nerve agent developed in the 1970s in Soviet Russia, Novichok is among the deadliest poisons ever developed and is banned under the Organisation for the Prohibition of Chemical Weapons. The Kremlin, predictably, denies involvement in the alleged poisoning, dismissing the German allegations as untrue.
That this could be the straw that broke the Nord Stream 2 back is perhaps surprising. The Nord Stream 2 natural gas pipeline has survived many obstacles. Many, many obstacles. The sequel to the original 1,222km Nord Stream that was inaugurated in November 2011, Nord Stream 2 will add 1,230km more pipeline between Vyborg in Russia and Lubin in Germany, with nearly all of the entire 2,452km length already being laid. Championed by former German Chancellor Gerhard Schröder and inherited by Merkel, the Nord Stream pipelines were developed to meet Germany’s growing energy demand, as it moved away from burning coal and nuclear fission. However, it has attracted criticism from many quarters. From Germany’s neighbours including Poland, Denmark and Estonia concerned over the pipeline that passes through their waters. From the EU, concerned about making Germany too energy dependent from a ‘politically unreliable’ country. From the US, which has threatened and, indeed, imposed sanctions on companies involved in the project. Some would argue that the vociferous US involvement, championed by President Donald Trump is self-serving, meant to allow US energy exports to muscle in, but it still fits neatly into Germany’s Russian dependence issue.
Throughout all this drama, Angela Merkel has stood firm. She, and her centre-right party CDU, have supported Nord Stream somewhat unenthusiastically with the primary concerns being the business element. It will unravel Germany’s plans to become a natural gas hub, as it tries to drive an EU movement towards cleaner energy. Many of Germany’s largest companies, include petrochemicals giant BASF and its energy arm Wintershall are also heavily invested in Nord Stream and the raw gas it will bring. It would also be a reputational risk to pull the plug on a project that is almost complete and set to be launched by the year’s end, and still leaves the critical question on how Germany will be able to address its energy deficit.
The business argument has overridden political concerns so far. But now a moral imperative has arisen through the attempted murder of Alexei Navalny, with his subsequent medical treatment in Berlin. This resonates in Germany particularly, since the country understands the historical consequences of authoritarian governments and the dangers it bring. The shifting of the political landscape, especially the rise of the Green Party has triggered a ferocious debate with high-ranking politicians from both the left and right calling for the project to be scrapped. Some are even arguing that Nord Stream 2 gas supply is no longer necessary, as the country’s energy requirements are now fundamentally shifting in a post-Covid 19 world.
If, and that is a very big if, the Nord Stream 2 is scrapped, that is at least US$9.4 billion down the drain and plenty more in collateral damage from peripheral activities. It will rock the boat when the usual Merkel instinct is to steady it. But the furore over an attempted assassination by one of the world’s deadliest methods no less, might be a stand that Germany is willing to take. After all, it knows first-hand the effects of an iron fist. Berlin has so far stood alone in advancing Nord Stream 2, even after the chorus of critics surrounding it grow louder and louder. If it were to kill the project, Germany could find plenty of supporters for that move and would be more than happy to offer themselves up as a role to scupper this ship. The options are varied, but one question remains that will influence the whole issue: how is Angela Merkel willing to go to take a stand over democratic ideals or business reality?
END OF ARTICLE
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