Despite the economic backdrop, 2010 signaled the consolidation of the worldwide solar electricity generation market, as evidenced by the number of projects awarded in existing markets and the advent of new opportunities in emerging markets.
The changes underway in the energy sector in general have caused an increase in the competition among various renewable energy sources increasing the pressure among the various kinds of renewable technology. In this regard, solar power remains highly competitive due to value-added factors such as dispatchability, scalability and the existence of multiple technological options that strengthen its strategic position.
Despite the prevailing financial uncertainty and the constraints on debt markets, the sector’s development was bolstered by governmental support, including the confirmation in December of the current regulatory framework in Spain, the establishment of the Federal Loan Guarantee (FLG) program in the US, and the publication of stable and attractive regulatory frameworks in new markets. Following are some highlights:
Accordingly, Abengoa Solar has strengthened its strategic position in the industry and, at the close of 2010, held a total of 3,448 MW on portfolio, including: 193 MW in operation utilizing both power tower and parabolic trough technologies, 930 MW under construction, and 2,325 MW in development and pre-construction.
Abengoa Solar and E.ON unveil agreement
Abengoa Solar develops and implements solar power technologies in order to combat climate change and ensure sustainability through the use of concentrating solar power (CSP) and photovoltaic (PV) technologies, contributing to the development of the communities where it operates.
Due to its constant efforts in research and development (R&D), Abengoa Solar has proprietary technology which places it at the forefront of solar technologies in its ability to generate clean and efficient power at a competitive cost.
Aerial view of the Solúcar complex in Seville, June 2010
Abengoa Solar is firmly convinced that solar energy meets the requirements to satisfy a significant part of society’s demand for clean and efficient energy sources, since every year the sun irradiates an amount of energy that amply surpasses the energy needs of our planet, and there are proven commercial technologies available today with the capability of harnessing this energy in an efficient way.
Abengoa Solar is also convinced that the renewable energies market, and more specifically the solar energy market, will continue to develop at a high rate, due primarily to:
This is why Abengoa Solar aspires to develop and implement efficient and dispatchable technologies to produce solar energy in those areas with the greatest solar potential.
Abengoa Solar’s business model is based on three lines of activity:
Abengoa Solar is firmly convinced that solar energy meets the requirements to satisfy a significant part of society’s demand for clean and efficient energy sources, since every year the sun irradiates an amount of energy that amply surpasses the energy needs of our planet, and there are proven commercial technologies available today with the capability of harnessing this energy in an efficient way.
Abengoa Solar operates in three key geographical areas or markets:
The geographic diversification of Abengoa Solar’s business affords major competitive advantages, such as less reliance on a specific regulatory framework, and helps to achieve greater business stability by reducing exposure to a specific market and its economic context.
Abengoa Solar conducts its business in a major growth market worldwide, with considerable opportunity for further growth due to the global need for energy solutions that combat climate change, that reduce countries’ energy dependency, and that avoid the higher cost and price volatility of fossil fuels.
As mentioned above, one of Abengoa Solar’s strategic pillars is its drive to develop proprietary new technologies through a constant effort in R&D that can be implemented in its sector, helping it to stay ahead of the field. This effort enables Abengoa Solar to secure economic advantages in a sector where technology evolves very rapidly, allowing it to offer competitive technologies going forward and a portfolio of solutions tailored to individual projects or markets.
Moreover, since its launch, Abengoa Solar has positioned itself throughout the value chain of the solar thermal energy business. This vertical integration enables Abengoa Solar to achieve synergies between the activities of development, operation and technology, such as designing optimal solutions, controlling key components and their supply, and enhancing cost competitiveness.
Lastly, Abengoa Solar’s experience in global markets has enabled it to become knowledgeable about a wide variety of regulatory frameworks. This know-how has been pivotal to its expansion in new markets with potential in CSP or PV energy, enabling Abengoa Solar to adapt more quickly than its competitors.
The team at Abengoa Solar has grown exponentially since the company was first launched, due mainly to the growth in activities and the consolidation and growth of the company’s project portfolio in several countries. During 2010, Abengoa Solar sought to attract top professionals and further develop their skills. In this regard, Abengoa Solar has implemented an integrated and comprehensive management system capable of meeting the needs of the company and its employees:
View of PS10 and PS20 operating alongside Eureka, the high-temperature solar power tower pilot plant
For a company such as Abengoa Solar, which is founded on the concept of sustainable development, the task of managing relations with the following stakeholders is vital:
Abengoa Solar has a risk management and analysis system in place throughout all of its business lines to hedge against five kinds of risk:
Risk Control at Abengoa Solar is structured around two core areas: Common Corporate Management Systems and Internal Audit Services.
The Common Corporate Management Systems implement Abengoa Solar’s internal standards and its chosen method of assessing and controlling risk.
The Internal Audit Services are in place to prevent the risks to which the different group companies are exposed, and to control the application of the appropriate management procedures in accordance with the Common Corporate Management Systems.
In this regard, it is worth highlighting the active financial risk management process. During 2010, almost all of Abengoa Solar’s revenues were Euro-denominated. However, as the company continues to grow, a significant portion of its revenues and costs will be denominated in other currencies, and the aim is to minimize exposure to exchange rate fluctuations by hedging appropriately. Accordingly, the company manages currency futures, swaps and options contracts on currency exchange rates and interest rates so as to limit the risk deriving from exchange rate fluctuations.
Furthermore, the cut in interest rates has not been directly mirrored in the cost of funding, since, in the broader financing context, funding and hedging margins have actually risen, offsetting the final impact.
In 2011, Abengoa Solar will continue to strive to consolidate its position as a leader in the solar energy sector, operating globally and efficiently with proprietary power tower, parabolic trough and PV technology.
The strategy will therefore continue to rest on the main pillars of Abengoa Solar’s business:
2011 is set to be a key year for the implementation of this strategy and for Abengoa Solar’s expectations for further growth. The company’s main objectives are as follows: