Solar panels on the Norwegian Arctic island of Svalbard. (Photo by VIKEN KANTARCI/AFP via Getty … [+]
If you were planning to start a business selling solar panels, the last place you would do it is Scandinavia. “It’s the worst place on earth to start a solar company,” says Andreas Thorsheim, CEO and founder of Otovo, a Norwegian company that has become Europe’s leading residential solar company. “It’s not just that we have the worst solar conditions in Europe. We also have the cheapest electricity and the most expensive labor.”
In addition, says Harald Overholm, CEO of Alight, a Stockholm-based provider of solar projects for business customers, “we lack not only sunlight, but also supporting schemes.”
Yet it is precisely that adversity that has enabled a number of Nordic solar businesses to thrive. “We were inspired by the US, where people built big solar companies just by selling on a pure commercial basis,” he adds.
Alight offers customers the opportunity to move away from dependence on volatile energy commodity prices. “Our customers can lock in a fixed price for the long term – between 10 and 20 years – through a power purchase agreement (PPA).
In a way, it forces you to perform, says Thorsheim. “And the cost of solar panels has come down so much in the last decade. Equipment used to be about 90% of the cost of an installation – now it’s 40%.
And being able to sell subsidy-free solar power in Scandinavia helps companies develop a skill set that is easily transferable to other markets. Alight has projects in Finland, the UK, Spain and Poland, as well as Sweden, where earlier this year it announced 2 GW of installations in partnership with Sveaskog, the state-owned forestry business. It aims to have at least 5 GW installed by 2030 – a total of €1 billion in investment.
To address the fact that labor is now a significant part of the cost of installing panels, Otovo – which is active in 13 European countries, from Portugal to Poland and Sweden to Spain – has created an innovative model where it connects customers with the army of small European. electricians, who offer their services through an automated tendering process and customers can choose the cheapest or the most suitable for their needs.
The company, founded in 2016, also uses technology, including satellite data, to help potential customers calculate how much sunlight their roof receives, how much energy it can produce and which products would be most effective. It took advantage of the fact that Norway made public detailed data on all buildings, enabling it to train its software on the shape of the roof automatically instead of collecting the data manually.
It also offers a rental option to reduce the initial cost of installation, which often serves as a barrier to adoption.
About 40% of its customers are now also buying battery storage from the company, double the percentage last year, and Thorsheim says that “within two to three years, all PV will be sold with batteries.”
For Alight customers, part of the appeal of solar is that “it makes their business greener in a very tangible way – signing that contract means something gets built. Green credentials are now not just about sustainability goals – it’s also a competitive issue,” says Overholm.
And these Nordic solar plants are just getting started. “There’s a lot left to do in solar,” Overholm adds. “The beauty of it, when you don’t have to worry about subsidies, is that it’s exactly the same wherever you do it. You are giving exactly the same thing. A lot of the technological advances have already happened – it’s just about producing energy at a lower cost.”
Thorsheim adds: “Scandinavia is a good laboratory for the future. If you can make it work here, you can make it work anywhere.”