Hanwha Solutions has announced that it will acquire RES Méditerranée SAS (or RES France), a French renewable energy company, securing the French firm’s construction and development capability and 5 GW clean energy project pipelin, through a press release on August 9th. With the acquisition, it is expected that Q CELLS will create diverse synergies in conjunction with its influence and technologies in the global renewable energy sector.
Let’s look into the meaning of the RES France acquisition and positive changes it will bring to Q CELLS.
Take a Peek at RES France, Top 10 Renewable Energy Developer in France
RES France is a French subsidiary of RES Group, the world biggest renewable energy company, based in the UK. Its headquarters is located in Avignon and it has six branches across France.
Since the establishment of RES France in 1999, it has engaged in renewable energy projects and management business, including solar, on- and off-shore wind, and energy storage, based on its well-established local network and business capability.
Currently, RES France accounts for about a 5 - 6 percent market share in the French renewable energy market, while securing a 5 GW pipeline (2.4 GW solar, 2.3 GW wind, 0.3 GW ESS) worldwide.
< Australia’s Murra Warra Wind Farm
Development Project carried out by RES France and Macquarie’s Green Investment Group (GIG) in 2020, Source: RES France Homepage >
Why is RES France the Best Choice?
France enjoys favorable environmental conditions for the production of renewable energy. The amount of sunshine in Southern France is equivalent to that of most parts of Spain (over 5 hours/day), while northern France experiences windy conditions that deliver a similar level of wind power resources as Denmark. The Paris Climate Agreement originated in France in 2015 with the aim of net zero emissions by 2050, setting a goal to expand the renewable energy ratio to over 40 percent from the current 22 percent.
What makes the French market more attractive is the expected high growth of the renewable energy market, because it is being promoted as an alternative to the country’s soon-to-be-reduced nuclear power base. Moreover, the French government provides a supportive environment in which to operate a renewable energy business, including a scheme to purchase renewable energy at a higher price range compared to the wholesale price for 20 years.
While France is an attractive market, high start-up costs and a long development period are considered obstacles to market entry. Recently in the French renewable energy sector, business enlargement through active mergers and acquisitions and difficulties in securing initial sites in the development phase have made it difficult for newcomers to enter the market. In France, the total period from licensing to operation of a power plant ranges from five to seven years, which is relatively long compared to three to four years in Korea. Charles Kim (Q CELLS CEO) said, “Although the French renewable energy market has high growth potential, it is difficult for new companies to enter.”
Acquiring RES France is the key to overcoming these obstacles.
The RES France acquisition not only allows Q CELLS to achieve economy of scale by expanding the total size of projects in Europe to 10 GW, but also to minimize the time from licensing to operation of a power plant. RES France is considered the most suitable partner in securing development sites and pipelines as the company is specialized in greenfield* projects and has sound local networks and digital capability.
* Greenfield: It is a type of business to build renewable energy power plant after directly securing a site and obtaining a license.
Through the acquisition, Q CELLS also plans to use France as its base for forays into the European market, including Germany. It is expected that the Europe’s green energy market will grow rapidly in line with Fit for 55*, a recently announced policy by the EU. How will it affect the acquisition of RES France?
* Fit for 55: It is a specific EU policy to expand green energy production to 40% by 2030.
Convergence of Solar and Wind Specialists
Q CELLS has been making continuous efforts to become a total green energy solutions provider beyond solar manufacturing. In addition to last year’s acquisition of the U.S. Geli·Growing Energy Lab, which will be the foundation for VPP projects, the company has expanded its investment in next-generation solar cell technology perovskite, while pursuing additional investment in a climate change response technology company and related M&A.
In this sense, this RES acquisition is expected to be an important turning point for Q CELLS to further advance its business areas, including the core business of solar power, based on RES France’s know-how and experience in wind power and ESS development, to become a total energy solutions provider.
<Q CELLS Strategy for a Total Energy Solutions Provider – Q CELLS>
As the sales composition of RES France – solar (11%), onshore wind (49%) and offshore wind (40%) – shows, on- and off- shore wind are its strengths. It is expected that the advantage of wind power will further strengthen the influence and competitiveness of Q CELLS focused on the Iberian Peninsula and solar power in the European renewable energy market. To understand this clearly, it is necessary to first understand the status and market environment outlook for wind power in the European renewable energy market.
In November 2020, the EC (European Commission) unveiled the EU Strategy on Offshore Renewable Energy plan to increase the proportion of offshore wind power in the total power supply to 30% by 2050 by improving renewable energy generation efficiency and reducing construction costs. In fact, the growth of wind power has continued, as 356 new wind turbines were installed within Europe in 2020, adding generation capacity totaling 2,918 MW.
<Development Status of EU Offshore Wind Power, 2020, Source: Wind Europe>
Looking into the EU major energy source outlook released by IEA (International Energy Agency), in the long term, the share of on- and off-shore wind power will continue to grow steadily, and wind will be the largest power source, overtaking solar and nuclear power, in 2040.
<EU’s Major Energy Source Outlook, Source: IEA>
Now Q CELLS has acquired capability in wind power, which is the key to the European market, and the company can solidify its status in Europe, including France.
Charles Kim, Q CELLS CEO, said, “As we have secured RES France’s development expertise, accumulated over 20 years, we look forward to seeing steady growth in the European market. Q CELLS will leap forward as a leading global green energy company by making bold investments in climate change response technology and companies.”
It will be interesting to continue to follow the journey Q CELLS will take after expanding both business area and regional diversification with the RES France acquisition.