Paolo Lugiato, of RTR, one of the most important solar plant management company in Italy, tells the Italian sector seen from the inside, between innovations, market, scenarios.
Today we are in an important moment in the photovoltaic market, which is growing again. What is the scenario of the sector for those who know little about it?
Paolo Lugiato: The first Italian photovoltaic boom, which lasted from 2000 to 2011, was mainly supported by the Energy Account which facilitated the construction of new plants. Since the incentives ended, the market increases have been smaller. But that doesn't mean they weren't there. On the contrary: they marked the beginning of a mature market, more centered on the value of operators. There are various sectors in which growth has been seen. The first are residential facilities that have benefited from the incentives given through tax relief and the growth in demand for self-consumption, supported by the reduction in the cost of storage facilities (batteries to be clear). The second are the companies that, to reduce costs, have invested in micro-grids, the so-called microgrids, thus becoming independent from the grid. The third area where there has been a development is that of grid parity, i.e. when the electricity produced from alternative energy sources (e.g. renewable energy) has the same price as traditional energy produced through traditional energy sources that is fossil sources and nuclear power.
What is the future for large photovoltaic plants born during the years of super-incentives?
Paolo Lugiato: the direction of photovoltaics in Italy, from the point of view of the large plants connected in the years of photovoltaic supported by subsidies, is led by the secondary market, ie the trading of existing plants. The absorption of small businesses that have invested in a couple of plants by companies with more marked professionalism, such as RTR, is essential. The small managers have realized that this job must be done in an industrial way, therefore strongly organized and managed in an entrepreneurial way. This has led to a strong increase in supply-demand among these small entrepreneurs and professional organizations with great skills.
From the point of view of technology, what changes have affected the market?
Paolo Lugiato: photovoltaic technology in the last ten years has had an incredible development. I would distinguish three macro points:
- The first is that the investment cost for installations dropped by 80%. If in 2011 a plant cost 5 million euros per megawatt, today it costs less than 800 thousand euros. The cost of technology has dropped dramatically thanks to the arrival of industrial producers, especially Chinese.
- Second: today photovoltaics is the first technology in the world in terms of capacity addition, that is the additional capacity, the speed of expansion of electricity production to guarantee the satisfaction of demand.
- The third point is the strategic technological advantages. First of all, thanks to technological progress, the cost of plants will continue to drop: potentially in 3-5 years it will drop by 25%.
Then there is the enormous advantage that it can be used anywhere in the world, both connected to the electricity grid and in the most remote and isolated off-grid place. This is key to bringing electricity to 1.4 billion people who still don't have access. Today in an African village you can put an 800 kWh system, disconnected from the grid, which supplies energy to the entire village, through a prepaid telephone card. The last advantage is that it can provide customized systems, from the mega solar farm to power Google's servers to the panel for the mountain home.
In your opinion, is the US reversal of the emissions cut by Donald Trump, who seems little interested in the renewable sector, an obstacle to the photovoltaic sector?
Paolo Lugiato: My point is that growth can be slowed, the hotbeds of energy sources rejected by markets such as coal can be re-started. But solar power is a train that never stops. Also in the USA the market has seen a 95% growth in installations, reaching 14.6 GW. This means that enough solar energy has been created to support 2.4 million more families. In terms of capacity addition, solar covered 39% of all installed systems. The future remains bright.
Q: If in Italy the secondary market remains central for investors, many are also looking abroad.
Paolo Lugiato: investments are "scouring" above all the Mediterranean area, particularly in those countries where there are conditions of political stability, such as Jordan, Saudi Arabia, Turkey. South Africa also offers great opportunities, given that it has finally begun to diversify its electricity production, still firmly anchored to coal, which accounts for 80% of production. If until three years ago Germany was in first place for photovoltaic installations, today at the top of the ranking we find China, the USA and Brazil. More and more newly industrialized countries are opening up to solar at great speed.
What are the elements that led RTR from being a start-up to becoming one of the most important companies in Italy?
Paolo Lugiato: Undoubtedly operational excellence. We have unique levels of performance ratios, the ability not to disperse even a ray of sunshine, thanks to a management of plants that are at the forefront in Italy and Europe. Thanks to a centralized monitoring system, we keep an eye on all systems and as soon as something is wrong we can intervene quickly within a few minutes. If the system does not work, you are losing precious sunshine and wasting money. Having created an efficient management model we have lowered costs by maximizing production.
We have also invested heavily in health and safety. Our product is electricity, high voltage on average, therefore very risky for those who work on these plants. We have developed a very sophisticated safety know-how that many other systems do not have. This gives our operators confidence and allows us to always keep performance high.
Finally, RTR has grown thanks to the attention paid to merger & acquisition operations. In fact, during the acquisition process, a complete review of all the opportunities on the market was always carried out, choosing the best and most performing plants, with growth potential.
You have opened an office inside the Progetto Manifattura green incubator in Rovereto (TN). Why?
Paolo Lugiato: Progetto Manifattura is the place where many renewable companies are moving. The Province of Trento had a very innovative vision. Creating a place where companies from the same sector meet and have the opportunity to network with each other and with innovative start-ups is essential for growing the sector and creating new partnerships. In Trentino the Silicon Valley of renewable energy and the circular economy is growing.
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