27 March 2014 — Publicly listed European company Photon Energy has opened up an Australian office in Bondi, NSW, bringing with it a no-capital model for commercial solar installations.
The company’s managing director and co-founder Michael Gartner told The Fifth Estate that while Australia’s sunshine levels made it a logical place for solar, policy contradictions in the energy sector posed a risk to the country’s long-term economic prospects.
Founded in 2005 in Prague, Photon NV comes to Australia with expertise developed across 100MW of solar plants under management across Europe. It was first listed in 2012 on the Warsaw Stock Exchange’s NewConnect, an exchange set up specifically for trading in the technology and renewable energy sectors.
“At the time, Warsaw was the fastest growing stock exchange in Europe,” Mr Gartner said. “The reason we chose to list there was there were many companies [also] from Eastern Europe, and a large pension [fund] sector which was keen to invest in renewable energy companies.”
Today the company is a shareholding company in the Czech Republic, Slovakia, Italy, Germany and Australia, with solar power plants also under their operation in France, Belgium and other European countries.
Photon has built more than 55MW of solar plants in Europe, owns and operates another 23MW of plants and operates the balance of the 100MW under their management for a variety of commercial parties.
In 2012 the company had an annual turnover of $12 million euros, which grew slightly through 2013 and is expected to grow by 30 per cent during 2014.
“[Our financial situation] is relatively stable as a lot of our income comes from selling power, growing new business with operation and maintenance [contracts] as well as hire-purchase arrangements and engineer, procure and construct contracts,” Mr Gatner said.
“All our [financing and contract] models have been rolled out everywhere we are doing projects. And we develop good relationships with our banking partners.”
In addition, the company has tapped the bond market in Europe and currently has $40 million Euro in bonds in Germany as a capital fund.
Engineering a cost-effective offering
The two models of energy provision Photon believes will be of interest to the Australian commercial market are a hire-purchase arrangement for solar plant, and a power-buying arrangement. With both models the advantage is no upfront capital spend, coupled with an immediate saving on energy costs.
The company is heavy on the engineering and technical skills, with a preference for maintaining in-house capacity for design, construction, project management, commissioning and O&M. Worldwide, of the company’s 77 staff, 38 are skilled in photovoltaics, batteries and storage, monitoring and electrical trades. The current Australian team of six includes engineering, design, project management, an accredited installer and electrical skills.
“We employ a significant number of experienced subcontractors,” Mr Gartner said.
“Our goal is to cover internally the main aspects, and the qualitative aspects, of building solar plants. We look for local partners wherever we do projects. We always involve locals because in terms of the long term O&M [it creates local jobs]. So we look for local contractors.
“It’s like building a network – building [local relationships] assists in building more networks.”
With a background in economics and banking, Gartner is conscious that assisting clients with demand reduction strategies and energy storage solutions brings additional value, with storage the key to being able to install a system with larger capacity and gain greater independence in terms of power creation and the associated energy cost reductions.
He identified two factors in the Australian power sector that contribute to the high costs of power. Firstly, the distances required for distribution, and secondly, the cost of maintaining a network distribution system that is in a “poor state” of repair and therefore represents a fundamental expense.
Beyond the urban commercial sector, the solar plants can with sufficient power storage provide a workable solution for remote and regional communities where the distribution network is poor or non-existent.
This is particularly relevant for remote Indigenous communities, where Gartner said the reliance on diesel limits prospects for creating employment due to the extremely high cost of increasing the power supply. There is also a clear incentive for regional authorities and local councils to install solar plants, as it frees up capital funds otherwise required for upgrading their local distribution systems, particularly when sufficient storage for steady off-peak supply is part of the design.
Solar projects boost NABERS ratings
Photon has to date constructed three rooftop-integrated solar plant reference projects in Australia: a 144-kilowatt system on the Blackwoods facility in Fyshwick ACT, a 140kW system on a data centre at Symonston ACT, and a 283kW system on a Sydney building at Strawberry Fields.
“The Strawberry Fields building is part of the green building revolution, and our system was installed to [help the client] meet the highest possible NABERS rating,” Mr Gartner said.
“[Projects] can also achieve additional Green Star points over and above the points all other energy efficiency measures enable them to achieve, and this holds true for all the other ratings systems. By reducing the grid [draw] by 15 per cent, projects gain an additional star. So you don’t have to refurbish a building, you can retrofit [rooftop integrated solar] – it is one of the cheapest ways to achieve higher NABERS ratings.
The other benefits of the company’s two no-capital models is they may in many cases also give a company tax benefits, and they free up capital to undertake other energy saving upgrades.
A solar spill looks like a nice day
Another aspect where a solar plant is superior to coal derived power is safety. Mr Gartner said that in their experience of operating and maintaining 100MW of solar plant, there has not been a single death or serious injury, unlike the coal industry.
It is a safe working environment, and with the majority of Photon’s plants based on existing commercial projects, there are inherently high levels of safety in the surroundings.
“It is also a very clean environment to work in – [unlike coal] there are no noxious gases and no particles to be ingested. It is a very healthy industry to work in,” he observed.
Practising what they preach
At Photon’s office in Bondi, a small solar powered battery recharging station the company has installed on the balcony provides all the power required for the office IT and mobile phones. It also acts as an uninterrupted power supply, and they are investigating how it might be used to power other office systems.
Discussions are also underway with the building’s owner to see if he will install a solar plant for the entire building.
The Fifth Estate suggested to Mr Gartner The Tenants and Landlords Guide to Happiness might have some tips on how to smooth those negotiations.
Coal’s vested interests not in national interest
Having grown up in Australia and gained his degree here, Gartner has an accurate assessment of the degree to which vested fossil fuel interests are part of the reason renewables are low on the government priority list for support. This is, he warns, holding Australia back and potentially detrimental to our long-term trade prospects.
“Globally there is a lot of interest in renewable energy and solar; we are seeing a real paradigm shift among investors and energy providers,” Mr Gartner said.
“The naysayers are still there, but even they are increasingly investing in the sector. Last week, a major German energy company said they had missed the boat on renewables, and are now changing direction [to renewable].
“The [Australian] utility sector has been shunning renewable to some extent – even though it has long-term benefits including reducing wholesale [prices], especially energy prices at peak times.”
This he considered unsurprising given Australia is coming out of a strong resources sector stage, which in his view is simply that – a stage.
“It is not surprising coal is looking to the future, [solar] is a disruptive technology for the sector. [But] Australia’s major coal markets are looking at investment in renewable, including China, who are looking at alternate uses for coal [other than power generation].
“Ultimately, fossil fuels as a fuel source for Australia were a short term [solution], whereas renewables have a long-term part to play in the development of the human race.”
Keep the RET or scrap the diesel subsidies
“There is enormous value in the Renewable Energy Target – it’s working, it’s not expensive and it gives the right message to companies. The RET is an inexpensive way of supporting faster roll-out of renewable [energy].”
Mr Gartner said the lack of long-term policy consistency and the risk of experienced companies being pushed out of the sector by withdrawal of support poses a threat to retaining the level of expertise which has developed in the sector’s skilled subcontractors.
There was also a serious risk in terms of global trends in procurement, which are shifting towards an increased emphasis on sustainability in the supply chain.
“If you continue to do things in an unsustainable manner, you get leap-frogged by companies doing things sustainably,” Mr Gartner said.
If you continue to do things in an unsustainable manner, you get leap-frogged by companies doing things sustainably.”
“It is similar to the leaps and bounds in OH&S over the last 20 years. No-one can deny having better safety and responsibility brings fruit and benefits and reduces costs long-term.
“It’s the same with carbon and power from buildings; it has knock-on benefits for the whole economy, and internalising these external costs [of this shift] is the responsibility of government.
“Australia will be left behind by Europe, the US and China [where renewable are being prioritised]. Renewable energy is also the big hot trend in Africa and Asia, as it is the cheapest way to provide energy to the end consumer. This is where people in developing countries are getting their power – they’ve leapfrogged a whole generation of technology, and have no burden of infrastructure.
“If the government is looking at repealing the RET they should put the cards on the table, and they have to level the playing field and reduce subsidies for diesel and coal [and other fossil fuels]. Level the playing field and let companies go ahead with investment in a rational way. It’s rather economically irrational to reduce subsidies in one sector without reducing subsidies to others.”