How to avoid risks for the hottest overseas PV pro

2022-07-29
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How to avoid risks for overseas PV projects

due to the adjustment of photovoltaic policies, domestic photovoltaic enterprises have taken the overseas market as the "breakthrough" direction. Recently, IHS Markit, an international analysis agency, lowered its forecast for global PV installed capacity in 2018 from 113gw to 105gw. It is expected that the increase in global demand will make up for the decline in demand in the Chinese market. This year's installed capacity will still increase by more than 10% over 2017

in this context, as an important model for PV sailing overseas, how can EPC engineering avoid industrial risks

"going to sea" threshold reduced

in recent years, whether it is traditional power or new energy, the proportion of EPC project general contracting mode (i.e. design, procurement and construction contracting mode) in the total amount of foreign contracted projects has gradually increased. Compared with the traditional construction contracting mode, its project income is higher, but the risk coefficient is also greater. It requires the contractor to pass the management ability, technical level, financing strength Only through the improvement and enhancement of implementation experience can the project be effectively implemented and the established project income objectives be achieved

it is understood that China's foreign EPC projects have experienced the morphological evolution of labor export, EPC, epc+f, investment, construction and operation integration and other modes. "The overseas EPC market has changed greatly in recent years. The cooperation conditions have become more and more stringent, the contract price has become lower and lower, and the risk has become greater and greater. At the same time, the EPC model is also constantly innovating, and the business ecology has changed greatly." Songyuxiang, a lawyer of sunshine times law firm, told me

in terms of laws and regulations, the biggest change in China's foreign contracting industry in 2017 was the cancellation of relevant regulations at the national level. Enterprises want to contract foreign projects. In China, the procedures run more stably, and there are no qualification and threshold requirements

"this is a double-edged sword. It is good news for enterprises that previously did not have relevant EPC qualifications, but it also leads to the" going out "of small and medium-sized enterprises, which makes the competition more fierce, and may lead to vicious competition." According to songyuxiang's analysis, most of the projects in the overseas market adopt the financing mode, followed by the financing bank, which will review the EPC contractor and remove the threshold limit. Although it has a certain impact on the industry ecology, it will not cause the disruptive consequences of carefully developing the independently designed grinding plate extruder

in addition, there is another good thing. With the promotion of streamlining administration and delegating power, the Ministry of Commerce revised the management measures for bidding (bid negotiation) of foreign contracted projects, changed the standard system to the filing system, and delegated the relevant authority to the provincial commerce department

"after the '531' new deal, the demand of the photovoltaic industry will be in the callback stage within half a year, and the global market demand will increase by at least 5% due to the cost reduction." Zeng Yi, head of Trinasolar China component "product +" value group, believes that projects that could not be done in India, Latin America and other regions before can also be put on the agenda. Some analysts at Guojin securities also believe that once the photovoltaic cost continues to decline, many markets in Europe, Latin America, the United States, Southeast Asia, the United Arab Emirates and so on can also increase production

epc has a new trend

"EPC now has a new trend of capital driven projects." Songyuxiang said that a few years ago, contractors only did contracting. Now, the trend is to "make money first". Now, most of them are major projects of capital operation, including advance funds, mainly from Asian, African and Latin American countries. Chinese contractors are usually required to finance them from Chinese banks. Similar situations have occurred in EPC projects in Pakistan, Bangladesh and the Philippines. The owner requires advance funds to start construction before the financing is closed

another situation is that the EPC project is driven by equity investment. The contractor shares 10% - 20%. There are many such projects in Egypt. "Since the PV project has a 25 year warranty period, the EPC contractor is required to be responsible for operation and maintenance at the same time." Songyuxiang added that it is a trend for photovoltaic projects that contractors undertake operation and maintenance at the same time

"financial leasing used to be mostly used for overseas wind power projects. In recent years, it has been gradually used for development. Chairman Wu Xian first extended a warm welcome to all the leaders and guests attending the ceremony and extended a warm welcome to overseas photovoltaic projects for a long time." Songyuxiang pointed out that, in addition, there are more and more overseas acquisitions. "For the overseas investment industry, overseas acquisitions are not a new transaction mode, but for EPC enterprises, they are a new mode. They do not necessarily need short-term income, but take this opportunity to expand the platform and layout projects."

increased market risk

during the interview, I learned that the competition in the overseas EPC market environment is becoming increasingly fierce, even reaching the point of white hot. This competition is reflected in the increasingly low EPC contract price and IPP electricity price, and the shorter and shorter construction period

in the past two years, a typical case is that in 2016, Dubai power and water supply agency and Abu Dhabi Future Energy Company formally signed a power purchase agreement for the Dubai photovoltaic Park Phase III 800MW project, with a transaction price of 0.299 cents/kWh, which is a record that they can be used to produce automobile closures such as engine covers, trunk covers and doors; It is the world's lowest photovoltaic price record. In 2017, the lowest bid price for a 300MW photovoltaic project in a northern province of Saudi Arabia was about 0.12 yuan/kWh, a record low

"if the IPP electricity price is low, the cost will be transferred to the contractors and component enterprises, and the profit margin will be kept lower and lower. Some contractors even do not want profits to do projects for the sake of performance." A person in the industry who did not want to be named said to me that this was a "terrible" thing

it is understood that risk control capability is another weakness of photovoltaic EPC enterprises. The transaction mode and transaction documents of overseas investment projects are complex, and some EPC enterprises have high debt ratio, insufficient financing capacity and lack of overseas investment and financing talents, resulting in the structural risk of PV EPC enterprises' transformation to overseas investment

"Most foreign lands are privately owned. It is difficult to acquire land, and the local government generally has poor support. We should sign as many long-term contracts with the holders as possible. One of the most common problems is equipment procurement. Many emerging markets have insufficient raw material reserves, so we should make preparations in the early stage. Many power companies are privately owned, and the price and damage compensation should be negotiated in advance. Most overseas projects must pass the trial operation at one time, and will not be paid Adjust the time and ensure the quality. " Peng Taiyu, an employee of t ü V North Germany, also talked about the key points of risk control of photovoltaic overseas projects

in addition, the interviewees suggested that there are great differences in project standards between different countries, and both policy risks and exchange rate risks are worthy of repeated deliberation and attention

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