PV integrators set to become subcontractors as size of solar projects increases


pv magazine: Mr. Scandellari, Enerray began an internationalization process a few years ago, after the Italian PV market collapsed. Is this process now completed?

Scandellari: I think this is a challenge that the company has now won. We are currently present in 13 countries across America, Asia and the Middle East. We are now in the process of expanding our activities in Latin America, especially in Brazil, and in Central Africa, and we are also considering emerging Asian solar markets such as Vietnam, Malaysia and Cambodia.

As for Latin America, which do you see as the most interesting markets?

We believe that Brazil is a market full of opportunities, and not only in the large-scale segment. Distributed generation is now a viable option in the country, although several obstacles still hinder the potential development of residential and commercial PV in Brazil, which remains a business environment with many challenges. Our entry into this market was facilitated by the presence of our parent company, the Italian industrial group Maccaferri, which is active there since 60 years. Other potentially interesting markets are in our opinion Colombia, Bolivia and Peru, where the Maccaferri group is also present.

How important is being backed by an industrial group with a diversified business for Enerray over the past years and, especially, after the Italian PV market collapsed between 2012 and 2014.

That was crucial for us, and not only in financial terms. The group has opened the doors to markets in which it already operated. We have had the chance to rely immediately on local commercial networks and employees speaking the local languages.

Which is the share of Enerray in the group’s annual revenue?

Currently, I would say around 8-10%.

Margins for PV project integrators are now quite low, how is your company dealing with this?

Margins are compressed independently from the complexities of each individual market. If we now look into solar projects with a capacity of over 100 MW, we can say these projects have now become as any other infrastructure project. Utility-scale projects will probably become bigger and bigger, and contracts will be more segmented. As a result, system integrators will act more as subcontractors in the future and civil works will become their main task. As for the distributed generation segment, I would say that margins are not particularly high, but risks are also limited.

Do you believe there’s a risk that project integrators will disappear in the future?

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I would say no; PV it’s still a fast growing market, therefore what I can foresee in the coming years is a consolidation process in the mature markets and newcomers in the early stage markets.

Enel's 254 MW Ituverava solar plant was built by Enerray in the state of Bahia, in the northeast of Brazil.

Image: Enerray

Which are the markets with the highest margins for integrators?

Turkey, Saudi Arabia and Jordan are markets in which we operate where margins can be considered higher than in other countries, although different types of challenge must be addressed here. Furthermore, I would point out the distributed generation segment in Brazil, where fiscal incentives are being granted to residential and commercial projects.

How is the price drop for modules and inverters impacting the integrators’ business?

With the current level of market competition, the almost 100% key component price drop goes for the benefit of clients; of course more projects can be realized worldwide with a lower CAPEX, so I would say that we do see an indirect positive effect.

Is Enerray interested in operating in the off-grid segment?

This is one of our priorities. Enerray has recently invested in Plug the Sun, a company based in Hong Kong in which it owns a 55% stake. The remaining share is owned by Fast Power. The company is already active in off-grid markets such as Argentina, the Philippines, Cambodia and Vietnam. We find it very interesting how pay-as-you-go models could boost this market. For the grid-off business, there is huge potential in many countries in Asia and Africa. Micro-grids are also becoming interesting, especially for the engineering element.

Will Enerray remain a solar company in the future, or will it diversify its business in other energy or infrastructure sectors?

For the time being we will remain focused on solar, which means for us mainly PV, plus CSP on opportunistic basis.

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