In our ongoing series talking to industry leaders, we have a chat with Solgen Energy Group executive general manager David Naismith about renewable energy, the solar industry and the challenges borne out of the growing solar power storage sector.
PACE: Could you tell us more about Solgen’s business direction here in Australia and what are your plans for your customers here?
David Naismith: Solgen Energy Group is a leading solar engineering, procurement and construction (EPC) group providing turnkey renewable solutions in the commercial and industrial sector. While the basics of solar power are generally well understood, the applications are growing.
We’ve completed projects covering large ground-mount solar farms, multi-story solar car parks with charging stations, solar pumping for agriculture – the applications are enormous and the market is demanding more innovative solutions. We have a very busy New Ventures team that spends all its time vetting product and opportunities, continually looking for the next solution for our clients.
PACE: What is Solgen’s position with regards to Industrial Internet of Things? (i.e. The need for cyber physical systems, Internet of Things, cloud technology)
David Naismith: We have seen a general commoditisation of products in the solar and storage space. Differentiation for solar is generally determined by the underlying design and experience of the vendor. Storage however is currently enjoying a differentiation by brand. Over time this will change and storage is likely to become extremely commoditised.
The leaders in the space will be the data owners and software developers that control the interaction between the grid, solar, storage and integration of consumption patterns. It is this platform that will lower electricity price delivery to the consumer by managing where that power comes from, and opens the opportunity for peer-to-peer energy trading. In addition, the platform will learn consumption patterns of the business and interact with machinery to best manage energy demand.
PACE: Why will solar energy be essential for businesses in future?
David Naismith: Solar power effectively acts as a long-term hedge on energy prices. Solar power is able to deliver electricity over 20 years at approximately $0.06 per kilowatt hour in today’s money – that’s a very stable savings both now and well into the future. Incorporating solar power into a business’s energy mix gives the business greater control over their rates moving forward. In addition, customers are demanding to source their products from businesses that can demonstrate manufacturing techniques that are environmentally sustainable at an efficient price. Solar delivers in both of these areas – renewable energy that delivers long-term savings to businesses.
PACE: Why would customers buy Solgen’s products over a competitor?
David Naismith: Solgen Energy Group stands out from its competitors by its experience in delivering some of Australia’s most iconic solar projects nation-wide. Our reputation for installing industrial solar panels is backed by our performance of projects in the field. We have carried out major rollouts for the National Broadband Network right through to food manufacturers in the Northern Territory. We have a simple and transparent commercial process for every industry that is renowned for delivering certainty around generation and financial returns.
PACE: Is Solgen looking to exploit economic opportunities from the home battery revolution?
David Naismith: Storage is a very exciting space. While still relatively expensive, the cost of energy storage is expected to fall rapidly over the next few years and we are already seeing evidence of these price drops. Current pricing means the business case in a commercial environment is difficult. However, where storage begins to play a role in demand management as well as shifting consumption patterns, we will see increased demand in the commercial space.
PACE: What supplementary service does Solgen offer customers?
David Naismith: Solgen Energy Group focuses on providing solar solutions to the commercial and industrial sector. Beyond this core market, the group also offers services for medium scale (megawatt) solar power plants and more niche markets such as solar water pumping solutions for agri-businesses, solar-hybrid solutions for remote communities and mines, and power factor correction for businesses with high inductive loads.
PACE: How do customers access product maintenance?
David Naismith: As a contract requirement, all customers are sent operation and maintenance manuals following the installation completion. These manuals are compiled in-house and are specific to every system. Contained within are maintenance schedules for the system, as well as shutdown and isolation procedures. Data sheets and warranties for every component used are attached to the manual, providing the customer with more in depth information on the technical specifications and maintenance duties for every part of the system.
In the event a customer requires further advice, or product is showing a fault or requires comprehensive technical maintenance, the customer would call their Solgen project manager that is always on hand.
PACE: What challenges do renewable companies face in competing against established interests like Big Oil and Big Coal?
David Naismith: Fossil fuels are no longer seen as a ‘competitor’ to renewable energy. Renewables have carved their own space and work in harmony alongside traditional energy. Fossil fuels face far greater challenges than renewables, simply because they are reliant on a finite resource, uncertain markets and enormous amounts of infrastructure to deliver. That infrastructure requires significant maintenance just to keep it running each day. Solar power on the other hand, has no moving parts and simply does its thing with exceptionally low maintenance requirements.
PACE: How do companies judge what level of solar power can meet their energy needs?
David Naismith: We assess the consumption patterns of a business over a minimum 12 month period and overlay a system specification that best meets the energy needs of the business. In most cases, the system is shaped on delivering energy that can be consumed in the business without exporting to the grid. However, even with the right blend of export to the grid, that can still deliver the highest financial returns. Our primary aim is to deliver the best financial outcome to the business.
PACE: When do you think renewable projects will not need government subsidies such as the renewable energy target (RET), ARENA support or grants from the Clean Energy Finance Corporation?
David Naismith: Anything that can contribute to higher returns is naturally a factor in our clients’ decision to implement solar. However, increasing grid energy prices and the lower cost of components mean that financial returns have gradually become strong enough as a standalone business case. This is why the Renewable Energy Target incentives are beginning to unwind. Our clients want to see the financials stack up without too much reliance on government policy.
PACE: With state governments ramping up renewable energy targets, is 100 per cent renewable energy (solar, wind, geothermal etc.) a realistic proposition or not?
David Naismith: Not only is it possible, it makes sense and delivers a far more stable outcome that is sustainable well into the future. Intermittency issues associated with wind and solar are now being addressed through significant advances in energy storage. Furthermore, with peer-to-peer energy trading, we are no longer reliant on single points of failure in delivery of our energy.
PACE: How much human labour is needed in future on renewable energy products?
David Naismith: The Climate Council recently noted that a 50 per cent Renewable Electricity target scenario in 2030 will lead to over 28,000 new jobs, or almost 50 per cent more employment than the current targets would deliver and 80 per cent of these jobs are an addition to the economy.
PACE: What is the next step in renewable energy – e.g. how do you see all the elements of the Fourth Industrial Revolution linking together? Do you see renewable energy linking up with quantum computing?
David Naismith: We have gradually seen barriers to purchase fall away, primarily driven by advances in technology that have driven significant reductions in price. This has been key in placing solar on a level playing field with grid power. We have gone from an industry that wasn’t really solving a problem other than green credentials to one that is becoming a critical part of any business’s energy mix.
We are in a very exciting space. Business and consumers will continue to pressure the grid to become more service-based and less supply-centric. That service will create unlimited opportunities for peer-to-peer, business-to-business energy trading where combinations of renewable energy, storage and cloud-based technologies will mean that businesses will have far greater control over how they consume energy and what they pay for it. We are a very progressive organisation and while solar will remain our core business, we need to keep innovating across its application and be mindful of adjacent technologies that in combination will maximise results for our clients.
PACE: What is the potential for solar microgeneration and people going off grid? What are the implications for Solgen and energy companies of Microgen?
David Naismith: We are seeing a large uptake of solar-hybrid systems that effectively allow people to come off-grid. This can be in combination with diesel generation or simply solar and battery storage.
*David Naismith is a founder of Solgen Energy Group with close to 10 years of experience across some of Australia’s leading solar projects. David has spent more than 10 years in corporate finance followed by his role as Chief Financial Officer of a technology group listed on both the Nasdaq and London Stock Exchange. David’s finance background provides a unique blend of financial and project development insight behind the drivers of deployment of solar power. David holds a Bachelor of Commerce, an MBA from Macquarie Graduate School of Management and is a chartered accountant.