Smart Solar is part of Smart Energy - a group of companies operating in the field of construction and production of electricity from renewable energy sources, as well as a manufacturer of photovoltaic panels. Smart Solar is focused on the design and construction of turnkey photovoltaic plants for South Eastern Europe. Todor Georgiev is CEO of Smart Solar
In 2023, the EU significantly raised its targets for green energy in the energy mix by 2030. What is the role of a company like Smart Solar in this ambitious energy transition?
We are well-positioned as a company with a 17-year history primarily focused on designing, building, and maintaining photovoltaic plants, as well as operating them. By July 1, 2012, we had constructed 35 MW in Bulgaria, a substantial achievement for that time. Of these, 25 MW are still part of our portfolio, and we continue to operate them. Subsequently, we expanded into neighbouring countries such as Greece, Romania, and Turkey. In Turkey, we have built over 500 MW of plants as an EPC, with some partnerships. Another part of our company has four factories producing photovoltaic panels located in Turkey. Starting at the end of March, we plan to commence the production of cells as all cells are currently produced in China while panels are assembled in other countries. We are also planning on building a new factory for cells and panels in Bulgaria next year, broadening our focus to also include polysilicon production. All of this provides us with a wide scope of operations. In recent years, we have built photovoltaic plants in Ukraine and continue to construct such facilities in Germany, the Netherlands, Portugal, Spain, Austria, and Hungary. Thus, we are prepared for these heightened targets.
Do these increased targets pose any challenges, either for the company, the industry, or the Bulgarian and Southeast European markets where you operate?
The main challenge for us is meeting the increased demand. We have the necessary equipment and trained personnel, but face difficulties in the labour market. Regarding the required equipment, there were disruptions in deliveries during the COVID-19 crisis, but the situation has normalized. A significant advantage is that we primarily work with panels produced in our factories, ensuring their quality and performance throughout their operational period. Another crucial point is that major investors now recognize the benefits of working with proven EPC companies. In previous projects, many of them preferred to purchase panels themselves, usually the cheapest with unproven qualities, and have someone else do the project, assembling numerous installers chosen based on the criterion of the lowest price. Naturally, the results did not meet expectations, but there was no one to hold accountable. At present, following the example of the USA, the EU is expected to impose restrictions on the import of Chinese panels. This will further stimulate panel production in Europe, and for this reason, we are directing our efforts towards opening a factory in Bulgaria to meet the growing demand. There are very few factories in Europe with not very large capacities. In the coming years, demand will be substantial.
Do you have a forecast for the scale by which production capacity should increase to meet the demand?
Currently, there is extensive construction of plants in Western Europe and our region, and the demand will increase at an ever-faster pace. The import of photovoltaic panels from China cannot be entirely replaced by European manufacturers, but creating a favourable business environment with proper regulations ensures a future for European panel production. We are prepared and anticipate full employment across our entire production capacity.
Is there potential for Southeast Europe to meet the demand from Western European countries? Can Southeast Europe become a supplier of panels for Western Europe?
That would be challenging; we do not have such capacity. The panel market has its specifics – panel production in China is subsidized by the state, and Chinese manufacturers are not currently obligated to comply with European regulations such as the Net Zero Industry Act and the forced labour ban. Many of them do not strictly adhere to specifications and indicators stated in certificates. I hope this will be regulated in the near future, so we can be positioned as equal participants in the market. This way, we and other European manufacturers will find our place.
We have touched upon the specifics of the Bulgarian market, but you were one of the first companies to commission a photovoltaic plant in Bulgaria. How has the market changed since then?
Until July 2012, Bulgaria had a preferential price for electricity produced from renewable sources. Since then, many things have changed. Although between July 2012 and 2019 there was no construction of photovoltaic plants in Bulgaria, for understandable reasons. The technology was expensive, and apart from that, there was no electricity market. That is why we mainly worked abroad. In 2019, there was a slight movement in the market, especially with smaller plants. Just when the market began gaining momentum, the pandemic started. The price of electricity became extremely low, and interest in building photovoltaic plants sharply decreased because the return on investment would be in the range of 15-20 years. Fortunately, the situation quickly normalized, the predicted economic recession did not occur, leading to a normalization of electricity demand. Then the war in Ukraine began, and electricity prices jumped again. This sparked increased interest in construction. There was market chaos, but ultimately, not many plants were built. Last year, electricity prices returned to normal ranges and matched our forecasts in our business plans before COVID-19. But this still translates into a period of eight to 10 years for return on investment. In other words, I expect serious long-term investors to remain in the market.
Tell us more about the other markets in your portfolio.
Within our company, Turkey is our largest market for understandable reasons – a large economy with significant electricity needs. Initially, there was a preferential price, and now there are certain concessions for plant construction. Anti-dumping prices for Chinese panels were introduced, predisposing the development of local production. The other two strong markets for us are the Netherlands and Portugal. In our region, we have a very successful operation in Romania. We conducted two pilot projects in North Macedonia, more are pending, and we are exploring the market in Serbia with two small projects. In many of these countries, the administrative process is significantly more streamlined than in Bulgaria.