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Global Market Insights looks at how efforts by governments, utilities and corporates to meet decarbonisation and carbon emission reduction goals will impact on the solar engineering, procurement and construction (EPC) market.

The research firm projects that the solar EPC market will exceed an annual installation of 100 GW by the year 2025.

The age of fossil-fuel based power generation is witnessing a steady decline, while the solar EPC market has correspondingly observed a faster growth over the past few years. Some may even venture to say that a 100 percent clean energy grid could be achieved sooner than expected, owing to tremendous investments in renewables being made by governments, private corporations as well as international energy and financial agencies.

Although not a sudden trend, unparalleled technological advancements have helped researchers and manufacturers in reducing the costs related to material acquisition, production of solar PV cells and other related services. This has allowed solar energy projects to become larger in capacity as compared to similar amount of investments put in a decade ago.

Essentially, people have realized that the initial cost of building a solar facility should not undermine its significance, being justified by the favorable long term impact on environment and considerable savings on utility bills. Supporting the rapid adoption of solar power for generating electricity, the solar engineering, procurement and construction (EPC) industry has emerged as an imperative driver expanding the accessibility to green energy.  

More recently, the segment has experienced intense competition across the world among new and established players. Derived from the massive gap in the demand and availability of affordable solutions, numerous firms have come up to meet the clean power requirements of low-income countries and slow-growth economies, with increasing access to more efficient solar equipment and new connectivity technologies and devices.

Global impact of ‘Mission 2020’ on the growth of the solar EPC industry

Worsening environmental pollution has been tugging at the conscience of government officials and consumers alike for many years now, although dire situations observed in countries like China and in oceans around the world have recently jolted them to action. In April 2017, former chief of climate at the United Nations, Christina Figueres, had overseen the launch of Mission 2020, an initiative aimed at accelerating the efforts to cut down green house gas emissions.

Energy: The foremost goal of Mission 2020 is to ensure that the use of renewable sources for electricity generation exceeds the use of fossil fuels by that year, with all the nations having built plans to achieve 100 percent renewable energy production. Even markets are to be altered to support the expansion of renewables, offering immense opportunities for the solar EPC industry.

The mission’s strategies also direct a focus towards making energy storage solutions available for complete power backup, suggesting a key development area for firms providing solar power solutions, such as Enerparc, SunPower, Canadian Solar, Conergy, First Solar and Swinerton. Fast-track decommissioning of coal-powered plants worldwide has only reinforced the industry prospects.

Infrastructure: One factor which favors the solar energy segment is the ease of building a facility on different terrains, whether it be on land or floating solar farms. As such, companies can have their own facilities to power business operations and sell surplus energy to domestic grids. Also, small towns and cities can have concentrated or expansive solar farms built to support household and industry applications.

According to the Mission 2020 objectives, a minimum of US$300 billion has to be invested yearly for boosting infrastructure decarbonization and local government agencies would have access to international funding. Subsequently, a large portion of these funds can certainly be expected to benefit small industries, cities and villages.

Transport: It has been instructed that by 2020, around 15 to 20 percent of new cars sold must be electric vehicles (EVs), while internal combustion engines must be phased out completely by the year 2040. Solar EPC companies, even the smaller ones, could enormously benefit from the growing sales of EVs, since PV cells allow the development of easy-to-use and affordable solar-powered car charging solutions.

Constructing EV-supportive infrastructure to ensure EV users have a green and abundant source of energy, for instance large charging stations in metros or many smaller stations along a highway, might define a critical growth avenue for the solar EPC market.

Industry: Mission 2020 has also set crucial targets for the heavy industry segment, including cement, chemicals, metal and oil & gas. These industries would be aiming to cut their emissions by half by the year 2050, besides having energy management systems and decarbonization strategies by 2020. Utilizing solar power can help the segment eliminate a considerable amount of CO2 emissions from renewable power generation.

A power grid comprising of wind and solar energy can also be fully metered and monitored using modern IoT devices and network infrastructure, to ensure optimal energy consumption. By 2020, there would be R&D initiatives in place to promote renewable energy for powering energy intensive machinery, further propelling revenues for solar EPC providers.

Financing: Apparently, at least US$800 billion of private investments and US$200 billion of public funds need to be spent on climate action every year by 2020. Expenses related to coal, oil and gas production are also being asked to be cancelled in favor of zero-emission sources of energy, providing additional resources to fund the development of alternatives like solar power.

The Mission has particularly mentioned the need for lowering the cost of capital for investing in climate control measures in developing economies. Access to international investments for local authorities will allow them to strengthen green energy investments at lower cost, creating significant prospects for solar EPC tenders.

Reformed stance of traditional energy suppliers to help expand the solar EPC industry

In 2016, the leading oil and gas company Total had announced that it would be investing nearly US$300 million globally towards installing close to 200 MW of solar capacity across 5,000 of its gas stations. Although the investment was said to indicate a shift in Total’s operations for reducing its carbon footprint, experts also considered it as an attempt to be ready for the future, when gas stations will be converted into EV charging stations. India, a country that has been quite slow in adopting EVs, also witnessed a similar case when two of its major oil companies decided to foray into the segment.

The Hindustan Petroleum Corporation and the Indian Oil Corporation had reportedly introduced EV charging stations in a city, at their company operated fuel stations. One can easily anticipate that such moves will create a demand for solar harnessing platforms for ensuring a clean, reliable supply of energy needed to power these cars of the future. As more oil and gas players around the world will look to build renewable sources of energy to stay ahead in the race for EV-compatible infrastructure, the solar EPC market can be forecast to record substantial growth over the coming years.