Where Sun Meets Water FLOATING SOLAR MARKET REPORT EXECUTIVE SUMMARY This report was researched and prepared by the Solar Energy Research Institute of Singapore (SERIS) at the National University of Singapore (NUS), under contract from the World Bank, with inputs and editing from staff and consultants at the World Bank and the International Finance Corporation (IFC). The work was funded by the Energy Sector Management Assistance Program (ESMAP), Government of Denmark, and the World Bank, and also benefited from in-kind contributions from SERIS. © 2018 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW | Washington DC 20433 | USA 202-473-1000 | www.worldbank.org This work is a product of the staff of the World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of the World Bank, its Board of Executive Directors, or the governments they represent. 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ESMAP would appreciate a copy of or link to the publication that uses this publication for its source, addressed to ESMAP Manager, World Bank, 1818 H Street NW, Washington, DC, 20433 USA; esmap@worldbank.org. All images remain the sole property of their source and may not be used for any purpose without written permission from the source. Attribution—Please cite the work as follows: World Bank Group, ESMAP and SERIS. 2018. Where Sun Meets Water: Floating Solar Market Report—Executive Summary. Washington, DC: World Bank. Front Cover: © SERIS Back Cover: © Pixbee/EDP S.A. Where Sun Meets Water FLOATING SOLAR MARKET REPORT EXECUTIVE SUMMARY EXECUTIVE SUMMARY Energy Sector Management Assistance Program (ESMAP) The Energy Sector Management Assistance Program (ESMAP) is a global knowledge and tech- nical assistance program administered by the World Bank. ESMAP assists low- and middle-in- come countries to increase their know-how and institutional capacity to achieve environmentally sustainable energy solutions for poverty reduction and economic growth. ESMAP is funded by Australia, Austria, Canada, Denmark, the European Commission, Finland, France, Germany, Ice- land, Italy, Japan, Lithuania, Luxemburg, the Netherlands, Norway, the Rockefeller Foundation, Sweden, Switzerland, the United Kingdom, and the World Bank. Solar Energy Research Institute of Singapore (SERIS) The Solar Energy Research Institute of Singapore (SERIS) at the National University of Singa- pore, founded in 2008, is Singapore’s national institute for applied solar energy research. SERIS is supported by the National University of Singapore (NUS), National Research Foundation (NRF) and the Singapore Economic Development Board (EDB). It has the stature of an NUS Universi- ty-level Research Institute and is endowed with considerable autonomy and flexibility, including an industry friendly intellectual property policy. SERIS’ multi-disciplinary research team includes more than 160 scientists, engineers, techni- cians and PhD students working in R&D clusters including i) solar cells development and simu- lation; ii) PV modules development, testing, certification, characterization and simulation; iii) PV systems, system technologies, including floating PV, and PV grid integration. SERIS is ISO 9001 & ISO 17025 certified. SERIS has extensive rich knowledge and experience with floating PV systems, including having designed and operating the world’s largest floating PV testbed in Tengeh Reservoir, Singapore, which was commissioned by PUB, Singapore’s National Water Agency, and the EDB. Launched in October 2016, this testbed compares side by side various leading floating PV solutions from around the world. Through detailed monitoring and in-depth analysis of performance of all the systems, SERIS accumulated deep insight into floating solar and SERIS’ objective is to dissemi- nate the best practices in installation and operation of floating solar pants as well as help to for- mulate standards for floating PV. CONTENTS 1 WHY FLOATING SOLAR? 1 AN OVERVIEW OF FLOATING SOLAR TECHNOLOGY 2 THE CURRENT GLOBAL MARKET FOR FLOATING SOLAR 7 POLICY AND REGULATORY CONSIDERATIONS 9 MARKET OPPORTUNITIES 10 COSTS OF FLOATING SOLAR AND PROJECT STRUCTURING 13 CHALLENGES 15 CONCLUSIONS AND NEXT STEPS 16 REFERENCES CHINA © Sungrow EXECUTIVE SUMMARY FLOATING SOLAR MARKET REPORT Why floating solar? Other potential advantages of floating solar include: Floating solar photovoltaic (PV) installations open up • Reduced evaporation from water reservoirs, as the new opportunities for scaling up solar generating solar panels provide shade and limit the evapora- capacity, especially in countries with high population tive effects of wind density and competing uses for available land. They • Improvements in water quality, through decreased have certain advantages over land-based systems, algae growth including utilization of existing electricity transmission infrastructure at hydropower sites, close proximity to • Reduction or elimination of the shading of panels demand centers (in the case of water supply reser- by their surroundings voirs), and improved energy yield thanks to the cooling • Elimination of the need for major site preparation, effects of water and the decreased presence of dust. such as leveling or the laying of foundations, which The exact magnitude of these performance advantag- must be done for land-based installations es has yet to be confirmed by larger installations, across multiple geographies, and over time, but in many cases • Easy installation and deployment in sites with low they may outweigh any increase in capital cost. anchoring and mooring requirements, with a high degree of modularity, leading to faster installations. The possibility of adding floating solar capacity to existing hydropower plants is of particular interest, An overview of floating solar especially in the case of large hydropower sites that technology can be flexibly operated. The solar capacity can be The general layout of a floating PV system is similar to used to boost the energy yield of such assets and may that of a land-based PV system, other than the fact that also help to manage periods of low water availability the PV arrays and often the inverters are mounted on by allowing the hydropower plant to operate in “peak- a floating platform (figure 1). The direct current (DC) ing” rather than “baseload” mode. And the benefits electricity generated by PV modules is gathered by go both ways: hydropower can smooth variable solar combiner boxes and converted to alternating current output by operating in a “load-following” mode. Float- (AC) by inverters. For small-scale floating plants close ing solar may therefore be of particular interest where to shore, it is possible to place the inverters on land— grids are weak, such as in Sub-Saharan Africa and that is, just a short distance from the array. Otherwise, parts of developing Asia. both central or string inverters on specially designed floats are typically used. The platform, together with its anchoring and mooring system, is an integral part of any floating PV installation. 1 1 FIGURE 1  Schematic representation of a typical large-scale floating PV system with its key components Transmission Lightning Protection Central System (connected inverter (from other arrays) PV modules to metal frames supporting modules and grounded) Floats/ pontoons Transformer Combiner box Mooring lines Anchoring Source: Solar Energy Research Institute of Singapore (SERIS) at the National University of Singapore (NUS). Currently most large-scale floating PV plants are to the platform’s location, bathymetry (water profile deployed using pontoon-type floats, with PV panels and depth), soil conditions, and variation in water lev- mounted at a fixed tilt angle. Typically, the floating el. Bank anchoring is particularly suitable for small structure can be made of so-called pure floats or floats and shallow ponds, but most floating installations are that are combined with metal trusses (figure 2). A pure anchored to the bottom. Regardless of the method, float configuration uses specially designed self-buoy- the anchor needs to be designed so as to keep the ant bodies to which PV panels can be directly affixed. installation in place for 25 years or more. Mooring lines This configuration is the most common. It is available need to be properly selected to accommodate ambi- from several suppliers and claims an installed capac- ent stresses and variations in water level. ity worldwide of several hundred megawatts. Another type of design uses metal structures to support PV The current global market for panels in a manner similar to land-based systems. floating solar These structures are fixed to pontoons whose only function is to provide buoyancy. In this case, there The first floating PV system was built in 2007 in Aichi, is no need for specially designed floats. The floating Japan, followed by several other countries, including platform is held in place by an anchoring and mooring France, Italy, the Republic of Korea, Spain, and the system, the design of which depends on factors such United States, all of which have tested small-scale as wind load, float type, water depth, and variability in systems for research and demonstration purpos- the water level. es. The first commercial installation was a 175 kWp system built at the Far Niente Winery in California in The floating platform can generally be anchored to 2008. The system was floated atop a water reser- a bank, to the bottom, to piles, or to a combination voir to avoid occupying land better used for growing of the three. The developer selects a design suitable grapes. 2 Medium-to-large floating installations (larger than 1 dives, the Netherlands, Norway, Panama, Portugal, MWp) began to emerge in 2013. After an initial wave Singapore, Spain, Sweden, Sri Lanka, Switzerland, of deployment concentrated in Japan, Korea, and the Taiwan, Thailand, Tunisia, Turkey, the United Kingdom, United States, the floating solar market spread to Chi- and Vietnam. Projects are under consideration or devel- na (now the largest player), Australia, Brazil, Canada, opment in Afghanistan, Azerbaijan, Colombia, Ghana, France, India, Indonesia, Israel, Italy, Malaysia, Mal- and the Kyrgyz Republic, as well as other countries. FIGURE 2   The most common float types: pure float (top) and pontoons with metal structures (bottom) INDONESIA © Ciel & Terre International INDIA © NB Institute for Rural Technology 3 Recently, plants with capacity of tens and even hun- capacity and annual new additions are growing expo- dreds of megawatts have been installed in China; nentially (figure 3). more are planned in India and Southeast Asia. The first plant larger than 10 MWp was installed in 2016, As of mid-2018, the cumulative installed capacity of and in 2018 the world saw the first several plants larg- floating solar was approaching 1.1 gigawatt-peak er than 100 MWp, the largest of which is 150 MWp. (GWp), the same milestone that ground-mount- Flooded mining sites in China support most of the ed PV reached in the year 2000. If the evolution of largest installations (box 1). With the emergence of land-based PV is any indication, floating solar could these new markets, cumulative installed floating solar advance at least as rapidly, profiting as it does from FIGURE 3  Global installed floating PV capacity 1,200 1,097 1,000 800 MWp 600 585 512 400 453 200 132 65 0 0 1 1 2 3 5 10 67 0 5 55 1 2 2 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 September Cumulative installed FPV capacity Annual installed FPV capacity Source: Authors’ compilation based on media releases and industry information. BOX 1 China’s collapsed coal mines turned into a solar opportunity There are dozens of flooded coal mines in China. nel. They are earning better wages and are no longer Spurred by China’s “Top Runner” program, solar exposed to harmful mine conditions known to cause developers are turning these environmental and social lung disease. disasters into an opportunity. Anhui Province is home Producing solar power in mining regions while scal- to the world’s largest floating solar installations to date, ing back coal-based power production is one way to ranging from 20 megawatts (MW) to 150 MW per site. improve local air pollution issues in several regions of Local people who just a few years ago worked China. underground as coal miners are now being retrained as solar panel assemblers and maintenance person- Source: Authors’ compilation based on Mason (2018) and BBC (2018). 4 all the decreases in costs attained by land-based have started to appear (box 2). In these installations, PV deployment. Most of the installations to-date are special attention needs to be paid to possible effects based on industrial basins, drinking water reservoirs, on the downstream flow regime from the reservoir, or irrigation ponds (figure 4), but the first combinations which is typically subject to restrictions related to with hydropower reservoirs, which bring the added water management (in case of cascading dams), benefits of better utilization of the existing transmis- agriculture, biodiversity, navigation, and livelihood or sion infrastructure and the opportunity to manage recreational uses. the solar variability through combined power output, FIGURE 4  Floating solar installations in Malaysia, and Japan MALASIA © Ciel & Terre International JAPAN © Ciel & Terre International 5 BOX 2 Hydropower-connected solar PV systems The development of grid-connected hybrid systems The PV power plant is directly connected through that combine hydropower and floating photovoltaic a reserved 330 kilovolt (kV) transmission line to the (PV) technologies is still at an early stage. Only a small Longyangxia hydropower substation. The hybrid sys- system of 218 kilowatt-peak (kWp) has been deployed tem is operated so that the energy generation of the in Portugal (see photo) (Trapani and Santafé 2015). But hydro and PV components complement each other many projects, and of much greater magnitudes, are (Choi and Lee 2013). After the PV plant was add- being discussed or developed across the world. ed, the grid operator began to issue a higher power The largest hybrid hydro-PV system involves ground- dispatch set point during the day. As expected, on a mounted solar PV. This is the Longyangxia hydro- typical day the output from the hydro facility is now connected PV power plant in Qinghai, China (Qi 2014), reduced, especially from 11 a.m. to 4 p.m., when PV which is striking for its sheer magnitude and may be generation is high. The saved energy is then request- considered a role model for future hybrid systems, both ed by the operator to be used during early morning floating and land-based. and late-night hours. Although the daily generation The Longyangxia hydropower plant was commis- pattern of the hydropower has changed, the daily res- sioned in 1989, with four turbines of 320 megawatts ervoir water balance could be maintained at the same (MW) each, or 1,280 MW in total. It serves as the major level as before to also meet the water requirements load peaking and frequency regulation power plant in of other downstream reservoirs. All power generated China’s northwest power grid. The associated Gonghe by the hybrid system is fully absorbed by the grid, solar plant is 30 kilometers (km) away from the Long- without any curtailment. This system shows that hydro yangxia hydropower plant. Its initial phase was built turbines can provide adequate response as demand and commissioned in 2013 with a nameplate capacity and PV output varies. of 320 megawatt-peak (MWp). An additional 530 MWp Source: Authors’ compilation based on Trapani and Santafé (2015); was completed in 2015. Qi (2014); and Choi and Lee (2013). First-ever hydropower-connected floating solar operation, Montalegre, Portugal PORTUGAL © Pixbee/EDP S.A. 6 Marine installations are also appearing. The deploy- Policy and regulatory ment of floating solar technologies near shore may be considerations of strong interest to populous coastal cities. Indeed, it may be the only viable way for small island states Currently, even in countries with significant floating to generate clean solar power at scale, given the limit- solar development there are no clear, specific regula- ed availability of land suitable for ground-mounted PV tions on permitting and licensing of plants. Processes installations. for the moment are assumed to be the same as for ground-mounted PV, but legal interpretation is need- Still at a nascent stage, near-shore solar PV is concep- ed in each country. In some countries, drinking water tually similar to deployment on inland water bodies. But reservoirs or hydropower reservoirs are considered the offshore environment poses additional challenges: national-security sites, making permitting more com- plex and potentially protracted. • Water surface conditions are much rougher (larger waves and higher winds) As highlighted in this report, floating solar deploy- • Mooring and anchoring become even more critical ment is expected to be cost-competitive under many amid large tidal movements and currents circumstances and therefore not to require financial support. Nevertheless, initial projects may require • Salinity tests the durability of components some form of support to overcome barriers associat- • The accumulation of organisms on equipment (“bio ed with the industry’s relatively limited experience with fouling”) can interfere with functionality. this technology. The harsh near-shore environment imposes stringent So far, a number of countries have taken different requirements on floats, anchors, moorings, and com- approaches to floating PV. Typical policies currently ponents. Alternative design and technological solu- supporting floating solar installations can be grouped tions may be required, drawing on the rich experience into two categories: of existing marine and offshore industries. Compared to the open sea, coastal areas such as lagoons and Financial incentives: bays are relatively calm and thus more suitable for floating PV, however, installations must still be able to • Feed-in tariffs that are higher than those for ground- withstand waves and high winds. On the other hand, mounted PV (as in Taiwan, China) some lagoons and bays can be environmentally sen- • Extra bonuses for renewable energy certificates sitive, which may limit the possibility for floating solar (as in the Republic of Korea) deployment in certain areas. • A high feed-in tariff for solar PV generally (as in The biggest uncertainties are long-term reliability and Japan) cost. Marine-grade materials and components are crit- • Extra “adder” value for floating solar generation ical for these installations, which must withstand rough under the compensation rates of state incentives weather. Operation and maintenance costs for near- program (as in the U.S. state of Massachusetts). shore PV are also expected to be higher than for inland installations. Supportive governmental policies: In the Maldives, near-shore solar PV is powering a tour- • Ambitious renewable energy targets (as in Korea ist resort; in Norway, a large fish farm (figure 5). Future and Taiwan) systems will likely fulfill needs that are additional to • Realization of demonstrator plants (as in the Indian energy production, such as the generation of hydro- state of Kerala) gen or the solar-based desalination of water. 7 FIGURE 5  Near-shore floating installations in the Baa Atoll of the Maldives, and off the west coast of Norway MALDIVES © Swimsol NORWAY © Ocean Sun 8 • Dedicated tendering processes for floating solar – Who will be responsible? (as in China, Taiwan, and the Indian state of Maha- – What permits/agreements will be required? rashtra) • Special considerations for hydro-connected plants: • Openness on the part of the entities managing the – Whether the hydropower plant owner/operator water bodies, such as tenders for water-lease con- is allowed to add a floating solar installation tracts (as in Korea). – Whether the hydropower plant owner/operator is allowed to provide a concession to a third party However, for most countries hoping to develop a to build, own, and operate a floating solar plant well-functioning floating solar segment of a wider solar – Management of risks and liabilities related to PV market, the following policy and regulatory consid- hydropower plant operation and weather events erations need to be addressed: that can affect the solar or hydropower plants • Unique aspects of permitting and licensing that – Rules of dispatch coordination of the solar and necessitate interagency cooperation between the hydropower plants’ outputs. energy and water authorities. This also includes environmental impact assessments for floating PV installations. Market opportunities • Water rights and permits to install and operate a There are more than 400,000 square kilometers (km2) of floating solar plant on the surface of a water body man-made reservoirs in the world (Shiklomanov 1993), and anchor it in or next to the reservoir. suggesting that floating solar has a theoretical poten- tial on a terawatt scale, purely from the perspective of • Tariff setting for floating solar installations (which the available surface area. The most conservative esti- could be done as for land-based PV, for example, mate of floating solar’s overall global potential based through feed-in tariffs for small installations and ten- on available man-made water surfaces exceeds 400 ders or auctions for large ones). GWp, which is equal to the 2017 cumulative installed • Access to existing transmission infrastructure: PV capacity globally. Table 1 provides a summary of – How will this be managed? the man-made freshwater bodies supporting this very TABLE 1 . Peak capacity and energy generation potential of floating solar on freshwater man-made reservoirs, by continent Possible annual energy Total Number Floating PV potential (GWp) generation (GWh/year) surface area of water Percentage of Percentage of available bodies total surface area used total surface area used Continent (km2) assessed 1% 5% 10% 1% 5% 10% Africa 101,130 724 101 506 1,011 835,824 167,165 1,671,648 Middle East and Asia 115,621 2,041 116 578 1,156 128,691 643,456 1,286,911 Europe 20,424 1,082 20 102 204 19,574 97,868 195,736 North America 126,017 2,248 126 630 1,260 140,815 704,076 1,408,153 Australia and Oceania 4,991 254 5 25 50 6,713 33,565 67,131 South America 36,271 299 36 181 363 58,151 290,753 581,507 Total 404,454 6,648 404 2,022 4,044 521,109 2,605,542 5,211,086 Source: SERIS calculations based on the Global Solar Atlas and Lehner et al. (2011a, 2011b). Note: GWh = gigawatt-hour; GWp = gigawatt-peak; km2 = square kilometers; PV = photovoltaic. 9 conservative estimate. Considering global irradiance needed for a PV plant having the same peak capacity data on significant water bodies, and assuming 1 per- as the hydropower reservoir. cent to 10 percent of their total surface area as used for floating solar deployment, an estimate of potential Costs of floating solar and peak capacity was derived using the efficiency levels project structuring of currently available PV modules and the surface area needed for their installation, operation, and main- Capital costs tenance. Then, to estimate potential electricity gen- The capital costs of floating PV are still slightly higher eration, the capacity estimate was multiplied by the or comparable to those of ground-mounted PV, owing expected specific energy yield, with local irradiance chiefly to the need for floats, moorings, and more used alongside a conservative assumption of an 80 resilient electrical components. The cost of floats is percent performance ratio. These estimates use very expected to drop over time, however, owing to better low ratio of coverage of the reservoir. In reality, many economies of scale. existing projects implemented on industrial or irriga- tion reservoirs cover much more significant portions of Total capital expenditures for turnkey floating PV instal- the reservoirs, after environmental studies confirm no lations in 2018 generally range between USD 0.8–1.2 expected impact on the aquatic life in the reservoirs. per Wp (figure 6), depending on the location of the proj- The situation from one reservoir to another can differ ect, the depth of the water body, variations in that depth, significantly, however. and the size of the system. China is the only country that has yet built installations of tens to hundreds of mega- There are individual dams on each continent that watt-peak in size. The costs of smaller systems in other could theoretically accommodate hundreds of mega- regions could vary significantly. watts or, in some cases, gigawatts of floating solar installations. Examples of such reservoirs are provid- As reflected in figure 6, Japan remains a region with ed in table 2. While hydropower and solar capacity relatively high system prices, while China and India do not provide the same type of power production achieve much lower prices, a pattern that can also be (solar typically has a lower capacity factor and gener- seen in ground-mounted and rooftop solar systems ates variable power), the table compares the surface when compared to the global average. TABLE 2 . Reservoir size and estimated power generation capacity of selected hydropower dams, and potential of floating PV to match the dams’ hydropower capacity Percentage of reservoir area required for floating solar to match dam’s Dam/reservoir Country Reservoir size (km2) Hydropower (GW) hydropower capacity (%) Bakun Dam Malaysia 690 2.4 3 Lake Volta Ghana 8,500 1.0 <1 Guri Dam Venezuela 4,250 10.2 2 Sobradinho “Lake” Brazil 4,220 1.0 <1 Aswan Dam Egypt 5,000 2.0 <1 Attaturk Lake and Dam Turkey 820 2.4 3 Narmada Dam India 375 1.5 4 Source: Authors’ compilation. Note: GW = gigawatt; km2 = square kilometer; PV = photovoltaic 10 JAPAN © Sungrow 11 FIGURE 6  Investment costs of floating PV in 2014–2018 (realized and auction results) UK—0.2 MW Sheeplands (2014) 1.14 Japan—2 MW Shiroishi Saga (2015) 3.12 Portugal—0.2 MW EDP Hydro (2016) 2.31 UK—6.3 MW Queen Elizabeth II (2016) 1.22 China—20 MW Anhui Xinyi (2016) 1.48 Japan—2.4 MW Noma Ike (2017) 2.93 China—40 MW Anhui Sungrow (2017) 1.13 India—0.5 MW Kerala (2017) 2.84 Japan—1.5 MW Mita Kannabe (2017) 2.93 Japan—13.7 MW Yamakura Dam (2018) 0.97 India—2 MW Andhra Pradesh (2018) 0.92 China—150 MW Three Gorges (2018) 0.99 India—5 MW West Bengal Auction Lowest Price (2018) 0.83 India—5 MW West Bengal Auction Avg Price (2018) 1.14 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 0.8 1.2 USD/Wp Source: Authors’ compilation based on media releases and industry information. Note: Using the 2017 USD annual exchange rates, as released by OECD. PV = photovoltaic; USD/Wp = U.S. dollars per watt-peak. Levelized costs of electricity, including sensitivity Equity investors would presumably require a higher analysis tariff from the off-taker to make the project econom- Calculated on a pretax basis, the levelized cost of ically viable for them, assuming debt financing was electricity (LCOE) for a generic 50 MW floating PV accessible. system does not differ significantly from that of a ground-mounted system. The higher initial capital If the performance ratio of a floating solar project expenditures of the floating system are balanced by is assumed to be 10 percent higher than that of a a higher expected energy yield—conservatively esti- ground-based project (instead of 5 percent), a sen- mated at 5 percent, but potentially as high as 10–15 sitivity analysis shows that the LCOE for the base percent in hot climates. This result holds at a range case decreases to USD 5.3 cents per kWh, almost of discount rates, as shown in table 3. Both projects equivalent to the LCOE of the ground-mounted PV have the same theoretical financial assumptions and project. irradiance. However, the main differentiating factors are system price (a floating system is considered 18 Project structuring percent more expensive), insurance costs (0.4 per- To understand how floating solar projects are typically cent of the floating system price vs. 0.3 percent for financed, it is useful to classify them into two main cat- ground-mounted systems), and performance ratios egories: those with an installed capacity of 5 MWp or (5 percent higher for floating systems). lower, and and those with an installed capacity great- er than 5 MWp. Table 4 summarizes typical financial The LCOE calculation represents only a break-even structures for these categories, which are similar to analysis—that is, if the tariff were set at the LCOE, financial structures for land-based PV deployment. the net present value of the project would be zero.1 To gain trust in the technology, public grants are often The discounted payback period is 20 years, and the equity internal 1.  rate of return is set at the discount rate. 12 TABLE 3 . Comparing the levelized cost of electricity from a 50 MWp floating with that from a ground-based PV system Ground-mounted PV Floating PV (fixed tilt) (fixed tilt) Electricity produced (first year), GWh 75.8 79.6 Increase in performance from ground-mounted fixed tilt 5% LCOE (U.S. cents/kWh) at 7% discount rate (base case) 5.0 5.6 at 8% discount rate 5.2 5.7 at 10% discount rate 5.4 6.0 Source: Authors’ compilation. Note: GWh = gigawatt-hour; kWh = kilowatt-hour; LCOE = levelized cost of electricity; MWp = megawatt-peak; PV = photovoltaic. TABLE 4 . Financing structure vs. size of floating solar system System size (MWp) Business model Ownership Financing structure ≤ 5 Self-generation Commercial Pure equity and/or corporate financing (or “on balance and industrial sheet” financing). Owner would typically be an energy- companies  intensive commercial or industrial company with ponds, lakes, or reservoirs on its premises and willing to install a floating solar system for its own use. > 5 Power sold to Independent power Mix of debt and equity (typically 80:20); on balance sheet the grid producers and or non-recourse project finance. The latter is still rare, public utilities  however, because such project finance structures make sense only for projects of a certain size (generally larger than 10 MWp). Future large projects will likely have financing structures similar to the ones used for utility- scale ground-mounted PV projects. Source: Authors’ compilation. provided to finance R&D and pilot projects (<1 MWp), Challenges which are often run by universities or public research While enough large-scale projects have been imple- institutions. mented to permit floating solar technology to be considered commercially viable, there are remaining Given their small size (except in China), most floating challenges to its deployment—among them the lack of solar projects are financed in local currencies and a robust track record; uncertainty surrounding costs; mainly by local or regional banks. Japan, Taiwan, and uncertainty about predicting environmental impact; a few other areas have seen an increased involvement and the technical complexity of designing, building, of local commercial banks seeking to take advan- and operating on and in water (especially electrical tage of favorable long-term feed-in tariffs available for safety, anchoring and mooring issues, and operation floating solar. The involvement of large international and maintenance). The experience of other technol- commercial banks, and of multilateral development ogies operating in aquatic environments, including finance institutions in developing countries, is expect- near-shore environments, offers good lessons in the ed to grow as larger projects become more common last of these areas. in areas outside China. In addition to the technical aspects, challenges relat- 13 HONG KONG, SAR CHINA © Water Supplies Department (WSD) of Hong Kong SAR, China ed to permitting and commercial aspects include: the hydro plant; and uncertainties about the adequacy a lack of clarity on licensing/permitting (especially of warranties of the performance or reliability of critical concerning water rights and environmental impact components. In most countries, the policy and regula- assessment); difficulties in selecting qualified suppli- tory framework needs to be adjusted to provide more ers and contractors; difficulties in designing insurance clarity in some of these areas. policies that include liabilities for potential damage of 14 Conclusions and next steps The deployment of floating solar looks set to accel- technologies and knowledge of positive and negative erate as the technologies mature, opening up a new impacts will be greatly enhanced if early installations frontier in the global expansion of renewable energy are diligently monitored, which will entail some pub- and bringing opportunities to a wide range of coun- lic expenditure. The need for monitoring, added to tries and markets. With a global potential of 400 GW the possible additional capital costs of floating solar under very conservative assumptions, floating solar over those of ground-mounted systems, makes early could double the existing installed capacity of solar installations in developing countries a strong candi- PV but without the land acquisition that is required for date for concessional climate financing. ground-mounted installations. At some large hydro- power plants, covering just 3-4% of the reservoir with To support market development, an active dialogue floating solar could double the installed capacity, among all stakeholders, public and private, is required potentially allowing water resources to be more stra- to further global understanding of floating solar tech- tegically managed by utilizing the solar output during nologies and to spread lessons learned from early the day. Additionally, combining the dispatch of solar projects across a wider area. Through this market and hydropower could be used to smooth the variabili- report and an upcoming handbook for practitioners, ty of the solar output, while making better use of exist- the World Bank Group and SERIS hope to contribute ing transmission assets, and this could be particularly to this goal, and we look forward to working with gov- beneficial in countries where grids are weak. ernments, developers, and the research community to expand the market for floating solar by bringing down When combined with other demonstrated benefits costs, supporting grid integration, maximizing ancil- such as higher energy yield, reduced evaporation, lary benefits, and minimizing negative environmental and improved water quality, floating solar is likely to be or social impacts. an attractive option for many countries. Although the market is still nascent, there are a sufficient number of In addition to the financing of public and private experienced suppliers to structure a competitive ten- investments, the World Bank Group is committed to der and get a commercial project financed and con- supporting the development of floating solar as well structed, and the additional costs appear to be low as hydro-connected solar by generating and dissem- and are falling rapidly. inating knowledge. Publications and tools planned for the Where Sun Meets Water series are: The priority over the next few years should be to car- • A floating solar market report ry out strategic deployments of floating solar at sites where it is already economic, while applying the “pre- • A floating solar handbook for practitioners cautionary principle” when it comes to possible envi- • Global mapping of floating solar potential (a geo- ronmental or social impacts. This may include initial spatial tool) limits on the portion of the water surface that is cov- ered and efforts to avoid installations in the littoral zone • Proposed technical designs and project structur- near shore, where plant and animal life may be more ing for hydro-connected solar. abundant. In addition, development of the constituent 15 REFERENCES BBC (British Broadcasting Corporation). 2018. “Solar Farm Means ‘I Can Breathe More Easily.’” Video story, BBC News, April 24. https://www.bbc.co.uk/news/av/business-43881280/solar-farm-means- i-can-breathe-more-easily. Choi, Y.-K., and N.-H. Lee. 2013. “Empirical Research on the Efficiency of Floating PV Systems Compared with Overland PV Systems.” CES-CUBE 25: 284–89. Global Solar Atlas: https://globalsolaratlas.info/ Lehner, B., C. Reidy Liermann, C. Revenga, C. Vörösmarty, B. Fekete, P. Crouzet, P. Döll, M. Endejan, K. Frenken, J. Magome, C. Nilsson, J. C. Robertson, R. Rodel, N. Sindorf, and D. 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