John Mullins is Founder and CEO of Amarenco and is one of Ireland’s top business figures. A leading green investment, Amarenco is focused on renewable asset development, financing and ownership in Europe, the Caribbean and the Middle East. John has a deep understanding of both the renewable energy sector and the correct deployment of capital and technology. Amarenco and Cantor Fitzgerald have successfully partnered on three fundraising projects and we look forward to launching a loan note opportunity over the coming months. We sat down with John to take a look at the growth of the Amarenco business and the renewable sector.
What global trends do you see in the solar market?
The solar market is increasing exponentially on a global scale as the cost of key components such as modules, inverters and balance of plant reduce. The costs of solar PV are also rapidly reducing.
The global average levelised cost of electricity (LCOE) from utility-scale solar PV projects (weighted by deployment) declined by 70% from 2010 to 2016. The assumed rate at which costs decline for solar PV in the future will vary slightly depending on local conditions, but in general it is around 20% for each doubling of cumulative installed capacity. Capacity is expected to double by 2020 and treble by 2030.
The Middle East is now turning away from fuel subsidies and investing in a combination of solar and storage to provide a realistic price of electricity in their markets. China and India continue to invest in solar for self-sufficiency and strategic reasons.
As the prices come down the cost of solar PV will migrate towards onshore wind costs.
Has the pricing of solar energy tightened further against traditional power sources such as oil and gas?
Oil is no longer a source of electricity generation. In many countries with irradiation levels of 1,600 hours and more, solar PV is ahead of gas generation and this trend will continue. Solar PV will of course become increasingly competitive as there is an upward swing in oil and consequently gas prices in global markets.
How has Amarenco developed their business over the past 4 years?
We started by raising funds with retail investors for our first plant in Avignon, France in 2014. We have worked with our shareholders and firms such as Cantor Fitzgerald to add to the portfolio over the last 4 years. We raised equity in the business in 2015 and thanks to very supportive shareholders, we have progressed to becoming a top 10 developer in the very large market of France. In 2016 we acquired a company based in Gaillac which has expanded Amarenco to over 50 professionals and we provide development, construction, operational and financing solutions for assets in France, Corsica, the Caribbean and Oman. We joined forces with the M&G Investments affiliate, Infracapital, to create Infram Energy in 2017 and the business has now close to 100MW under management. We have a development agreement with TOTAL oil company in France and with Macquarie Capital in Ireland. We anticipate a turnover of over €50m in 2018 on a consolidated basis. We are currently active in developing over 500MW globally.
Has the experience of operating in France been positive?
Our experience of operating in France has been excellent. You must operate with a French team as there are distinct cultural differences between Irish and French business norms. The critical difference lies with the legal system; the French system is not a common law system. A power purchase agreement in Ireland could be 80 pages long whereas in France the agreement is 2 pages in length. The regulatory system is very good and the Energy Transition Law provides greater investment certainty in the renewable space than is present in Ireland. Labour laws are different in France but the majority of our staff are under 35 years of age and they are very enthusiastic about the Amarenco story. We were very proud in 2017 to receive the title of Best Irish Company in France for 2017.
What is the current position in the Irish market in relation to the roll out of solar power, as has occurred in other European markets?
Firstly, the acceptance and realisation that solar PV will dominate electricity markets worldwide is not fully appreciated in Ireland. Since the publication of the White Paper on Energy in 2015 by Alex White, we have been waiting to see a new Renewable Support scheme but this has yet to happen. All the while, Ireland is heading towards fines from the EU for not achieving its binding renewable targets. This in my view is a deep failure in Government and it will cost the Irish taxpayer. We have a clear choice – pay fines to other countries or set subsidies to promote economic growth in Ireland and avoid fines. I would always vote for keeping our money at home in Ireland.
There appears to be a move amongst Big Oil into renewable energy – are you seeing this?
Big Oil and the automotive industry are strategically agreed that between now and 2030 electric vehicles will dominate personal mobility. The profit and loss accounts of the Big Oil companies will require investment in electricity generation and the ability to trade electricity. The acquisition by BP of a significant stake in Lightsource is one of the most significant moves in Europe. At Amarenco we currently work with TOTAL in France on the development and trading of solar PV electricity. We see this partnership strengthen as time goes on. Shell Energy Ventures is also investing heavily in the space. Renewable electricity is now the third leg to the Big Oil stool.
What are the next steps for Amarenco?
We plan to develop offices in the Caribbean and the Middle East, providing solar PV solutions with our partners. We will continue to work within the French market for many years to come. We hope that the consented plants which are shovel ready in Ireland will get the requisite support from Government. We will be developing solar/storage solutions in Corsica in the first instance with a view to deploying such solutions globally. The market for solar PV is rapidly increasing and we believe we are in the right place and the right time with the right people.
To read the full interview with John Mullins, CEO of Amarenco, click here to download our May Investment Journal.
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