Solar Companies Look Abroad for Growth

Lack of support on home front causing shift

Thursday, November 24, 2005

The sun isn't exactly shining on Canada's solar-power industry, say sector representatives.

And Canadian companies that design, manufacture and sell solar-energy technologies are increasingly looking overseas to do business, especially in the booming European market.

Rob McMonagle, program director with the Ottawa-based Canadian Solar Industry Association (CanSIA), says that in many cases Canada's solar industry has no choice but to cast its gaze and its investment dollars to distant lands to grow their businesses, even though that can be a challenge without the proper support at home.

"You really need that home base to be able to expand any markets internationally, and that's a big challenge for the Canadian solar-manufacturing companies," McMonagle says.

Sustainable Energy president/CEO Michael Carten says Canada must decide if the solar-power industry is important.
"To try to get into new markets offshore, one of the questions is, 'How are the sales in your own country?' And when there are no support mechanisms at home ... it's very hard to develop that in overseas markets."

Not even in Alberta, which boasts one of the sunniest skies anywhere in the Dominion, does the solar sector bask in popularity.

Just ask Sustainable Energy Technologies.

The Calgary company has developed and markets a power inverter that converts the direct current generated by solar-photovoltaic panels, fuel cells and wind turbines into an energy-efficient, reliable alternating current - the electricity used in homes and businesses and carried on utility transmission lines.

The company, along with a Spanish partner, will begin manufacturing inverters in Barcelona next month to sell to a European market that has become a world leader in incorporating solar-generated electricity into its supply of power.

"(Canada) is not creating the same market pull that the Europeans want to do and are doing," says Michael Carten, Sustainable Energy's president and CEO.

"We're not creating an environment for Canadian companies to succeed, and the reality is, you cannot build a business and be in a market that's 3,000 miles away."

Germany and Austria, for example, compel utilities to offer long-term contracts for independent solar-power producers - under a system known as feed-in tariffs - that allow them to sell onto the grid at an equivalent of more than 90 cents per kilowatt-hour. Italy, Spain, Greece and other southern European countries also offer long-term contracts, but at slightly lower rates.

Germany alone had installed 768 megawatts of grid-connected solar power by the end of 2004, and posts annual growth rates of more than 50 per cent.

A British Columbia-based firm, Xantrex Technology Inc., manufactures and supplies inverter technology to the European marketplace and is rapidly expanding its business on that continent and elsewhere.

The Burnaby company - which also designs off-grid solar-power technologies as well as products for wind-power systems - has announced a number of agreements this past year in the United States and Europe.

Around 95 per cent of Xantrex's revenues from solar-technology sales come from outside Canada.

Lloyd Gromm, the company's director of marketing of renewable power, says there's been some government interest in Canada, although it pales when compared to efforts being made in California, Japan and especially Germany. He says provincial governments and their federal counterpart must start to act if the industry is to avoid being eclipsed by European players.

"(Government) incentives are really important, but also deciding what is the true cost of our power - where does our power come from, is it clean, where are we at with Kyoto," Gromm says, adding that in a few years when it comes time to invest in solar power, it might be German companies, not Canadian ones, where Canada is buying its products. "Germany will be coming on, en masse."

CanSIA says that while Canada lags the rest of the world in support of solar technologies, there are some bright spots on the horizon. In Ontario, as the province attempts to move away from coal-fired power generation, the provincial government recently recommended the adoption of feed-in tariffs for renewable energy technologies at its annual policy convention CanSIA is calling for the installation of 15,000 systems in Ontario by 2015, and the increase in annual sales from the current level of 50 to 60 grid-connected systems sold per year to annual sales of 5,000 within 10 years.

John Hollick, president of Toronto-based Conserval Engineering, acknowledges the steps being taken in Ontario, but adds he has seen very little provincial support for his company's solar-thermal technologies used in space heating.

While Natural Resources Canada offers to pay 25 per cent of the cost of installing the solar thermal panels on factories, buildings and, more increasingly, residential homes, Ontario and other provinces do little to promote this and like technologies, he says.

"It's got to be put into the building codes, like they have it now in Europe," Hollick says. "In the U.K. if a builder wants to construct a building, they have to use 10 per cent renewables. And the only way Canada is going to meet its Kyoto commitment is to mandate it in some form, and I think at the building-code level is the ideal way to do it."

CanSIA cites Alberta as the province that is least supportive of solar initiatives, where it is "extremely costly or even impossible to connect to the grid"; B.C. and Manitoba fare better as they at least offer some "net-metering" options, which essentially credit those who produce their own power.

However, Winnipeg-based Solar Solutions Inc. - which offers building integrated solar systems, solar water pumping, power systems as well as sign, billboard and airport lighting systems - says Manitoba remains a stagnant market.

While the company does some business in the province - largely serving to remote and off-grid locations as well as fitting some urban buildings with power generation and cooling systems, the international arena will likely be its main growth market.

"We're involved internationally, that's where we're focusing more of our attention," says Martin Sellar Voll, head of international projects and sales.

"We have a project coming up in 2006 in Africa," he adds, noting that the foreign market accounts for roughly half of Solar Solution's business. "We're going to continue to look abroad until there's more demand locally."

Meanwhile, Carmanah Technologies Corp. of Victoria recently landed a contract that in the first year will see the company provide 1,200 solar-powered LED-(light-emitting diode) illuminated bus stops in London, England. It's just one of several international ventures for the company.

Carmanah, which got its start selling its LED navigational lights to the U.S. Coast Guard, now offers the gamut of solar technologies. This past summer the company purchased Soltek Powersource Ltd., giving Carmanah an in with solar-power systems.

Company spokesman Dave Davies says while the Soltek deal increases the domestic side of the business (before the takeover, revenues from abroad accounted for 90 per cent of its business; today it's around 60 per cent), the international market will be the main focus.

"We're going to take the (Soltek) technology and start marketing it internationally."

Back in Alberta, Sustainable Energy's Carten knows that the company's home province is a tough place to make a go of it. In addition to extending little support to the solar industry, a booming oilpatch - which has led to higher costs in many areas - makes it an expensive place to do business.

"I think as a country we have to look at ourselves and say, 'Are we going to be part of this game of this new energy industry or not?' and we have so far made the decision that we're not."