10 SOLAR PV IN SINGAPORE IN THE ABSENCE OF SUBSIDIES
237
liquid assets as collateral and are known as secured loans. Non- or limited
recourse project finance may also be utilized, though this kind of finance
is not readily available for smaller loan sizes. Furthermore, the lack of
familiarity and standardization causes investors to demand higher returns
due to higher perceived risks, while conducting more stringent due diligence that translates into higher transaction and monitoring costs. Thus,
the cost of borrowing remains high for solar PV companies despite public
sector credit guarantees and other forms of collateral.
The small size of projects in Singapore also limits use of innovative
financial mechanisms, such as investment trusts and YieldCos due to high
transaction costs and the lack of aggregation capacities. Options such as
crowd lending have yet to pick up in Singapore, further limiting access to
suitable investors. In this ecosystem, project developers are only left with
high-cost options such as private equity.
PV Intermittency and Grid Integration. The other major challenge
to large-scale adoption of PV in Singapore, as is the case elsewhere, is
the intermittent and variable nature of PV output. Singapore, being situated near the equator, has a tropical climate with two monsoon seasons
separated by inter-monsoonal periods (Meteorological Services Singapore
2017). Singapore receives rainfall 178 days a year on an average, and the
median cloud cover is approximately 90% (mostly cloudy) throughout
the year (Weatherspark 2017). Thus, despite having average annual irradiation on the order of 1580 kWh/m 2 /year, PV output in Singapore
can be highly intermittent. Figure 10.3 shows how highly variable solar
irradiation can be over a twelve-hour period (at one-minute intervals) at
a weather monitoring station in Singapore. Consequently, Singapore is
concerned about the implications of high PV penetration on the stability
of the power grid. Solar PV systems are thus categorized as Intermittent
Generation Sources (IGS) in the electricity market.
However, the figure above does not present an accurate picture of
PV output in Singapore. As mentioned in the previous sections, PV
systems in Singapore will mostly be installed on rooftops distributed
across the island. Thus, due to the variability smoothing effects of spatial
diversity that is discussed in the literature (Marcos et al. 2011; Mills
and Wiser 2010), the aggregated output of all PV systems is expected
to be much less volatile as compared to the output of a single PV
system. Figure 10.4 shows one-minute solar irradiation as measured
at four monitoring stations across Singapore. The bold line shows the
237
liquid assets as collateral and are known as secured loans. Non- or limited
recourse project finance may also be utilized, though this kind of finance
is not readily available for smaller loan sizes. Furthermore, the lack of
familiarity and standardization causes investors to demand higher returns
due to higher perceived risks, while conducting more stringent due diligence that translates into higher transaction and monitoring costs. Thus,
the cost of borrowing remains high for solar PV companies despite public
sector credit guarantees and other forms of collateral.
The small size of projects in Singapore also limits use of innovative
financial mechanisms, such as investment trusts and YieldCos due to high
transaction costs and the lack of aggregation capacities. Options such as
crowd lending have yet to pick up in Singapore, further limiting access to
suitable investors. In this ecosystem, project developers are only left with
high-cost options such as private equity.
PV Intermittency and Grid Integration. The other major challenge
to large-scale adoption of PV in Singapore, as is the case elsewhere, is
the intermittent and variable nature of PV output. Singapore, being situated near the equator, has a tropical climate with two monsoon seasons
separated by inter-monsoonal periods (Meteorological Services Singapore
2017). Singapore receives rainfall 178 days a year on an average, and the
median cloud cover is approximately 90% (mostly cloudy) throughout
the year (Weatherspark 2017). Thus, despite having average annual irradiation on the order of 1580 kWh/m 2 /year, PV output in Singapore
can be highly intermittent. Figure 10.3 shows how highly variable solar
irradiation can be over a twelve-hour period (at one-minute intervals) at
a weather monitoring station in Singapore. Consequently, Singapore is
concerned about the implications of high PV penetration on the stability
of the power grid. Solar PV systems are thus categorized as Intermittent
Generation Sources (IGS) in the electricity market.
However, the figure above does not present an accurate picture of
PV output in Singapore. As mentioned in the previous sections, PV
systems in Singapore will mostly be installed on rooftops distributed
across the island. Thus, due to the variability smoothing effects of spatial
diversity that is discussed in the literature (Marcos et al. 2011; Mills
and Wiser 2010), the aggregated output of all PV systems is expected
to be much less volatile as compared to the output of a single PV
system. Figure 10.4 shows one-minute solar irradiation as measured
at four monitoring stations across Singapore. The bold line shows the