LONDON–The rise of Grupotec Renewables’ bourgeoning U.K. solar business is indicative of the growth seen in solar deployment across the country in recent years. On entering the market in 2011, the company set ambitious targets of installing 100MW of PV in a three-year timeframe. Two years later, the company boasted a successful portfolio of more than 200MW installed utility-scale solar, propelling them to become one of the largest EPC firms in the U.K. market, no small feat for a company that had zero presence in the country three years ago.
Grupotec began life as a construction and engineering company in 1997, with Grupotec Renewables being founded by current CEO Ander Muelas in 2006. Based out of Valencia, Spain, the company accumulated nine years of experience in the construction sector before making the decision to open its renewable energy business, a move Muelas described as “a natural step.”
The move tied in with measures introduced by the Spanish government to accelerate renewable energy deployment across the country, particularly the solar feed-in tariff. Over the next eight years, Grupotec Renewables grew from installing a 16-panel, 2KW rooftop system in Valencia to constructing projects up to 30MW across two continents.
However, 2010 saw the beginning of the much-documented reductions in governmental support for PV in Europe. In Grupotec Renewables’ home market of Spain, changes were triggered by the “deficit of the electricity tariff,” calculated as the difference between total revenues collected through selling electricity and real costs in terms of energy generation, distribution, and transport. It was calculated that from 2002-09, Spain installed a total of 3.5GW of PV and CSP at the cost of $21.6 billion, leading to cuts of 45% to government incentives.
Having become a leader in the Spanish market, Grupotec Renewables were involved in the industry-government discussions that lead to a €0.44/kWh FiT, something Muelas looks back on as key reason for the market’s downturn. “As an industry, we asked for such big targets that we created a bubble,” he recalled. “In hindsight it was a bad decision to ask for such a tariff level because the bubble burst.”
With an impressive portfolio of large-scale projects in operation across Europe and a vastly experienced solar engineering workforce, the company was ideally suited for the U.K. market. As Legal Counsel Javier Ruz noted, such a move also presented an opportunity for Grupotec Renewables “to engage with many of the world’s leading financial institutions that are based in the U.K. and are increasingly exploring ways to invest in solar projects.”
However, as an outsider attempting to enter a foreign market, Muelas acknowledged the company faced a number of challenges, the biggest of which was “effectively communicating our EPC expertise to U.K. developers and solar financers.”
The hard work paid off, particularly with the company’s continuing work with Lightsource, the country’s largest solar developer. Lightsource has an operating portfolio of more than 600MW across the U.K., announcing earlier this year that it had connected a whopping 277MW to the grid in March alone. By becoming Lightsource’s EPC of choice for ground-mount PV, Grupotec has grown to become a major player in the U.K.’s solar landscape; the firm’s market ascent culminated in installing more than 130MW over 14 weeks at the start of 2014.
The company’s projections for 2014-15 are equally as impressive, with Muelas confirming that the company is aiming to construct over 200MW across 15-17 projects between April 1, 2014, and March 31, 2015.
March 31, 2015, will also be a significant day for the entire U.K. industry, as it marks the controversial incentive switch from the renewables obligation (RO) scheme to contracts for difference (CFD). Many in the industry have voiced concern over the government’s decision to impose the new scheme, with Solarcentury leading a legal challenge against the move (more of which can be found in our interview with Solarcentury earlier this year).
Rather surprisingly, Grupotec Renewables are fully in favor of the switch to CFDs and is one of the few companies to back the government’s now-confirmed intensions to scrap support for any projects over 5MW. “We think it’s a sensible move from the government,” said Muelas. “You have to control the power you’re adding to the grid. By setting the maximum level of support at a 5MW project, you are able to regulate the added capacity and effectively manage the annual budget for solar.”
Grupotec Renewables are in the unique position of witnessing first hand how large, under-regulated subsidies can affect a market, learning many lessons from its experiences in Spain. “If you allow the industry to build 50-100MW parks as happened in Spain,” noted Ruz, “you can effectively kill the market. By controlling the volume in the U.K., you can achieve a steady, longer-term market for five to seven years.”
The introduction of CFDs will mean an inevitable industry rush to build PV projects before the March deadline in order for projects to qualify for support under the RO scheme. Grupotec Renewables aren’t exempt from this and are expecting to commission the vast majority of its 200MW pipeline between November 2014 and January 2015. However, Ruz confirmed that the company is fully prepared for the busy period, with contractors and suppliers lined up to begin work once projects are commissioned.
Grupotec Renewables are also firmly behind the government’s plans to reignite the U.K. commercial market, as are many of the country’s leading EPCs and developers. The firm will once again look to utilize its commercial solar experience from mainland Europe, where it has more than 200 commercial rooftop installations in Spain and France alone, being the first EPC to construct a commercial rooftop system in Spain.
With the U.K. business continuing to go from strength to strength, Grupotec Renewables have relocated its headquarters to Richmond, London. However, the company has ambitions of growing its solar offering beyond Britain.
Grupotec Renewables are already has several completed projects in operation in France. The next step will be the opening of a Paris office to both exploit recent changes to the country’s renewable energy targets and to work with existing U.K. clients and customers on cross-channel opportunities. The company is also planning to enter the Polish market and believes the Eastern European country has strong potential for growth after a new energy bill was approved in April that should significantly increase clean energy deployment.
Like Solarcentury, Grupotec Renewables sees the Latin American market as a key future market. The region presents many challenges, particularly in securing reliable finance to fund ground-mount projects. However, with a 30MW plant starting construction in Mexico and a 23MW project already under way in Puerto Rico, the company has already made substantial gains in the region.
Until solar-friendly regulations and business practices become more common in the region, such large projects may be hard to replicate. Yet considering its successes in the U.K. market combined with the company’s vast experience as an EPC, it wouldn’t be surprising to see Grupotec Renewables apply the same blueprint for success in even more global solar markets.
PHOTO COURTESY OF GRUPOTEC RENEWABLES
Tags: commercial/industrial-scale solar, distributed generation, EPC / engineering, financing, FIT / feed-in tariff, interconnection, market research, policy, procurement & construction, PV / photovoltaics, solar energy, solar power, utility-scale solar