As numerous European countries restructure their solar policies, PV demand in the region has fallen for the past three years in a row. So why is First Solar so bullish on building its business in Europe?
It's not necessarily new power plants that interest the mega-solar-plant developer. It's the thousands of power plants already built that may offer an opportunity for growth.
"We happen to be strong believers that in the next six to ten years there will be a tremendous amount of monitoring retrofits in Europe," said Bob Callery, First Solar's VP of operations and maintenance.
That's why First Solar just announced its plans to acquire skytron energy, a German company with the fourth-biggest fleet of monitored solar PV projects in the world. Skytron has a full suite of monitoring software, plant controllers, junction boxes and sensors -- as well as a decade's worth of data on nearly 4.5 gigawatts of solar plants.
It's not just a hunch that improved monitoring capabilities will become more important in Europe. According to a new report from GTM Research and SoliChamba Consulting, there were 6.3 gigawatts of monitoring retrofits last year, mostly in Europe. That was the first time that monitoring retrofits on existing plants outpaced the installation of monitoring systems on new plants.
"The major wave of retrofits that we saw in 2013 was about replacing infrastructure, and we will see more in 2014," said Cedric Brehaut, an expert on solar monitoring and operations & maintenance, who authored the GTM report.
First Solar has its own proprietary set of equipment and software to monitor the performance of solar power plants. In 2012, it opened up a major operations center in Arizona to centralize data collection for its utility-scale power plants. But the company is looking to move beyond mega-scale solar projects and get deeper into commercial and industrial project development. Skytron's fleet enables that transition.
According to Brehaut, the average size of First Solar's monitored power plants was 100 megawatts in 2013. Skytron has become a strong force at the opposite end of the spectrum, with an average fleet size of 9 megawatts. First Solar now has access to a set of monitoring and O&M technologies that can scale for a broad range of project sizes beyond the Americas, where 98 percent of its monitored portfolio is located.
"This gives us the ability to leverage the best attributes of both systems," said Callery. "Skytron's technology was interesting because it could be applied to smaller projects."
The combined entity gives First Solar nearly 7 gigawatts of solar plants under monitoring, which is the fourth-largest portfolio in the world, ranking behind SMA, Solar-Log and meteocontrol.
"More importantly, First Solar and skytron added almost 2.8 gigawatts in 2013, which makes them the fastest-growing monitoring provider globally," said Brehaut. "The other three firms all grew more slowly in 2013 than in 2012, while First Solar and skytron accelerated their growth."
The benefits of the acquisition will come from more than just new hardware or an expanded geographic footprint. First Solar will get decades of experience that skytron has gained from working with a variety of platforms.
"This gives us a 4.5 gigawatt knowledge base to learn and understand from,” said Callery.
That experience operating lots of different plants could help First Solar as it looks beyond the traditional power purchase agreement and starts developing more merchant solar projects, while also scaling down project size.
The global monitoring market is going strong. Data from GTM Research and SoliChamba Consulting shows that the market grew to 39.7 gigawatts last year, a 90 percent increase over 2012. In the next four years, the monitoring market could grow to nearly 80 gigawatts, with the bulk of demand centered in Asia.
Skytron's monitoring capabilities were an important part of the acquisition, said Callery. But First Solar is looking to wrap those capabilities up into its broad turnkey O&M strategy to develop new dispatching and analytics services for utilities.
"Neither skytron nor First Solar will be a pure-play monitoring provider," he said. "We know we have to develop different solutions to stay competitive."
For more on how the monitoring market is evolving, see the new report from GTM Research and SoliChamba Consulting, Global PV Monitoring: Technologies, Markets and Leading Players, 2014-2018.