Fernando Sánchez, Sputnik Engineering: "Grid parity in Spain could be hit somewhere between 2013-2015"

Incorporated in 1991 in Biel, Switzerland, Sputnik Engineering AG specialises in the development, distribution and maintenance of grid-connected solar inverters. Fernando Sánchez García (1971) has been General Manager of Sputnik Engineering Ibérica since 2008. He studied physics in Salamanca and Zaragoza and previously worked for AEG Saft power systems as Business Development Director in the area of renewable energies.

In this interview Fernando Sánchez talks about the impact of the current recession on his group and on the solar industry as a whole. He also considers a number of localised issues in Spain which are seen by many players in the PV sector as both threats and opportunities.

Interview date: June, 2009

Author: Toby Price 

Firstly, tell us abit more more about Sputnik. What makes Sputnik stand out from its competitors?

The SolarMax series supplied by the company based in Biel (Switzerland) consists of a broad product range of inverters for roof projects and central inverters for solar power plants. Thanks to many years of experience and continuous optimisation these units feature the latest technology, the highest quality, reliability, maximum yield and a highly attractive price/performance ratio. Sputnik’s oldest inverters have been operating continuously since 1992.

Ever since the company was established, Sputnik Engineering AG has been one of the pioneers among manufacturers of grid-connected solar inverters. In 1994, Sputnik had already released the world’s first transformer-less inverter on the market. The SolarMax inverters are easy to install and are very stable, reliable and safe. They deliver 100 percent power at ambient temperatures of up to 45°C. The warranty of the SolarMax string inverters can be extended to 12 years. For the SolarMax central inverters, Sputnik offers a warranty of 20 years. SolarMax is the number one in central inverters in the world. Until now, more than 6,000 units have been connected to the European grid. Sputnik Engineering has 18 years of three phase manufacturing experience.

Could you please describe Sputnik’s working philosophy?

Sputnik Engineering AG was founded in 1991 by Christoph von Bergen and Philipp Müller and has focused since then exclusively on the development, sales and maintenance of inverters for grid-connected photovoltaic plants. The two company founders and managing directors have always been keen on environmental protection. From a two-man company, they created an enterprise with around 250 staff in Switzerland, Germany, Spain, Italy and France. Our customers choose our products because they trust in our experience and in our high quality products and because we are leading in after sales. With every contact, our customers experience our open-minded and customer-orientated company culture. In addition, we place a high value on a long-term relationship with our partners based on trust. We are and we will stay a financially independent company.

What are Sputnik’s objectives for this year and next?

True to the company’s motto “Always a sunbeam ahead”, Sputnik aims to further expand its position on the international solar market and to advance solar technology with its products. This year, Sputnik Engineering will produce inverters with a total capacity of 420 megawatts.

At the largest specialist trade fair for solar technology world-wide – Intersolar – we announced the guarantee extension for our string inverters to twelve years. In addition, we presented new versions of our dimensioning programme MaxDesign and of our display panel MaxVisio. Next year, Sputnik will release several new SolarMax inverters.

And now, regarding the sector as a whole, what impact has the global recession had on the PV sector both in Spain and worldwide, and on Sputnik in particular?

The main impact is driven by the credit crunch in the banking sector since most of the installations face credit barriers to be released. Likewise, continuous panel price drops seen during Q1 led to customers waiting to see how deep this drop would be. Regarding Spain, the new pre-assignation system and the further delays relating to this system have additionally blocked any activity until March this year. Altogether this has driven the PV sector on the first half of the year to underperform in comparison to last year.

How are Sputnik and the other players in the PV sector (companies, industrial associations, public institutions, etc.) responding to this situation?

Sputnik has adjusted its manufacturing output to this situation. On the other hand, we foresee that regular business pace will be recovered during the second half of this year.

How do you see the PV sector evolving in Spain in light of the legislation (Royal Decree 1578/2008) passed at the end of last year? What challenges does this new legislation pose for the PV sector?

The new RD1578 has drastically changed the rules of the game. Basically, the main impacts are the cap for new installations and the pre-assignation system. The cap has reduced the total solar market capacity by 5 times in comparison to 2008. Although all players agree that 2008 was too extreme in all senses, in practice, it means that Spanish companies grew in capability, skills and competences to enable 2008 to happen and now they have to reposition themselves in light of this new reduced scenario. Likewise, the pre-assignation system has blocked any new ground-based solar installation projects until 2010. Consequently, all companies are looking to industrial roofs as the targeted installations to run business.

Focusing once again on Sputnik and assuming that the current world economic crisis starts abating in 2010, what are your growth forecasts for Sputnik in Spain and abroad?

Our expectations and forecasts for the Spanish market are very positive and it will be strongly depending on the government cap. In terms of market share, we feel very optimistic and confident, since we have a good reputation and are recognised as a reliable solar inverter company, with a very large portfolio to fulfil any demand for roof installations, which is foreseen to be a very important market segment in the coming years. Likewise, Sputnik has been the reference in Spain for major ground-based solar farm installations and we are focusing strongly on this segment.

What are the most important factors affecting the development and growth of companies in your sector? (E.g. ease and cost of procuring project financing, the new administrative procedure for registration (under RD 1578/2008), the project guarantees established in RD 1578/2008, a lack of qualified personnel, etc.)

Basically, the total cap imposed by the new RD 1578, since the Spanish market has a much higher capability to develop solar projects, as can be easily seen by the long waiting list of projects in the different pre-assignations. Likewise, there is a lack of capability to forecast projects and the associated feed-in tariff, since you can only guess which pre-assignation quarter your project could be in, and then, figure out the feed-in tariff digression associated with that quarter.

The Chairman of the European Photovoltaic Industry Association (EPIA), Ernesto Macías, has highlighted the importance of reaching grid parity as soon as possible to boost the development of solar technology without the need for subsidies. When do you consider grid parity will be reached?

Estimations are strongly depending on the consumer electricity tariff evolution. Currently, there is a deficit between the tariff charged to end consumers and actual electricity costs. It is intended that the end consumer tariff will progressively increase to cover this gap. Then, if we also extrapolate the cost reduction for solar projects, grid parity in Spain could be hit somewhere between 2013-2015.

How do you see the PV sector evolving in the future? (E.g. new technologies that could complement and/or compete with solar PV, changes in market demand for solar PV products, decentralisation of electricity generation (microgeneration), increased solar cell efficiencies)

In the mid term, increased efficiency for solar panels might be achieved at a competitive cost. Currently, many companies are doing research on this topic. This will contribute strongly to reaching grid parity. Other technologies like solar thermal or PV concentrating plants could gain momentum, mainly in countries with high solar radiation (i.e.: USA, Spain, Australia, etc.).

Eduardo Collado, technical director of the Spanish PV Industrial Association (ASIF), has been quoted as saying that the wind and PV sectors will find it difficult to fulfil the technical requirements established in the draft proposal for the new Operating Procedure of the Spanish electricity grid operator (P.O.12.2). What is your opinion of the measures taken by Red Eléctrica Española (REE) to facilitate grid connection of renewable energy installations and ensure they are capable in the medium term of offering the same complementary services as traditional generating installations (i.e. contribute reactive energy, help stabilise grid voltage and avoid frequency fluctuations)

Sputnik met REE a few months ago to analyse the likely impact on inverters due to this new directive. Our conclusion is that technically it is possible; however, it would have a clear impact on overall cost and timing (at least 2 years). Our assumption is that it may make sense for major installations (>10MW), but that it is not feasible for smaller plants.

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