First Solar began its sales move into the Asia Pacific markets about four years ago, opening sales offices in what they consider the core markets in the region: first Australia, and then Thailand, Indonesia, Japan, China, and Malaysia, becoming familiar with a variety of policies driving renewables in each market.

“We've certainly dealt with a number of different policy challenges,” First Solar’s Asia-Pacific VP of Business Development Jack Curtis tells PV Insider. “We’ve worked under a range of different mechanisms including feed in tariffs, tax credits, grants and loan guarantees.”

The Arizona-based firm’s initial experience had been with the very successful US Department of Energy (DOE) policies like the Loan Guarantee Program (LPO). The company was selected for conditional loan guarantees worth $4.5bn for three of its biggest power plants in California.

“The decision to fund, or not to fund a project was based on a large number of factors, most of which are spelled out in both the legislation and the rule making which guides the programme,” says former Director of the LPO, Jonathan Silver, who was brought in to run the new programme in the Obama administration’s first term, under a Democratic congress.

“In general, projects had to demonstrate the capacity to make a material reduction in greenhouse gases and other kinds of particulates, incorporate innovative technology that was not yet widely commercially available and be sufficiently creditworthy that there was a reasonable prospect of repayment.”

The DOE programme was sharply curtailed with the change in the House majority. Arguably, First Solar’s nascent experience with the instability of clean energy policy in the US honed their survival skills in weathering changing policy landscapes in other countries as well.

Australia: policy instability

“When we came to Australia, there were a couple of very strong policies that supported the renewable industry, which supported our growth,” Curtis explains.

“The first one being the renewable energy target, which is similar to the renewable portfolio standards in California. It requires Australian generation deliver a certain amount of renewable electricity by 2020.” The company also benefitted from ARENA support.

But going ahead, these sorts of climate policies have been under attack from the new Abbott government, and it is likely they will be stymied going ahead.

“With the government that came into power in the last year, they have engaged in a review of that renewable energy target, and a review of agencies that have had a historic support of renewables, and we’ve yet to see what has come out of those reviews.” he explains. “I think we'll have a better idea towards the end of this year.”

But Curtis emphasises that, regardless of what happens, the larger picture or the underlying “macro story” is more important to their growth than the policies that it results in.

The macro story

“Regardless of what the policy mechanism is, we want to make sure that there is a macro story that makes sense as it relates to solar being sustainable in that market when that policy mechanism, regardless of what it is today, is no more,” he explains.

“And so we commit our resources - and the company on a long term basis - to those countries which, once solar has scaled and achieved a certain level of adoption, that once the policy mechanisms have ratcheted down, or are removed, there is a macro story which makes sense; so solar has a long-term presence in the Generation mix.”

Policy instability first in the US, and now in Australia, has led to looking at policy drivers in the larger context of the underlying market driver.

“What's really probably more important to us, as we look at these markets,” says Curtis. “is ‘are these markets potentially sustainable without policy support at some time in the future?’”

“Although at this stage in the game, each of these markets has had, at various points in time, policies that we regard as supportive and attractive, we really overlay that view.”

Australia has the required macro conditions that should enable solar to make a meaningful contribution to the generation mix. Not only does it have great sunlight and great land availability, but also a wide open and largely untapped electricity market.

“The market is structured in such a way that makes it quite straightforward to navigate the commercial aspect of it, and it's largely been untapped for some time,” he explains.

Curtis says that First Solar looks for markets such as this, where - even once solar has scaled and the policy mechanisms have ratcheted down - there is a similarly underlying need ensuring solar a long-term presence in the generation mix.

Japan: stable future needs

Another example of a good “macro story” is Japan. With no options for local generation from fossil energy, and captive to high imported gas, the nation’s policy is driven by the fragility of its energy security. Not only has nuclear energy become less attractive with Fukushima decommissioning costs, but the nation is intrinsically energy insecure.

“Some people might look at the feed in tariff in Japan and say oh well, that's a fairly supportive mechanism,” says Curtis.

But its underlying absence of fossil energy options means renewables are really its only option.

“I think the regulator that oversees and administers the Japanese feed in tariff structured the programme very well, bringing the price down gradually each year,” he says. “Which is what should be done. Rather than like Spain where they had a price one year, then they completely pulled it the next year.”

China: over supplied, but too big to ignore

China’s underlying market attractiveness is the obvious one of size. But there are obstacles for Western developers higher in the supply chain,such as First Solar.

“US exports face some headwinds into China right now given the trade cases there,” says SEIA VP of Trade & Competitiveness John Smirnow.

“For example, US polysilicon exporters were recently subjected to antidumping and countervailing duties in China. It continues to be a key export market for US solar materials, such as encapsulants and back sheet. But the key to future growth across the supply chain is to resolve the US-China solar trade conflict, and that’s where we’re focusing all our attention.”

Aside from trade tensions there is also their lingering domestic module glut.

“China has an oversupply that it has created itself, making it a non-competitive market,” Curtis says. “But China is a ‘too big to ignore’ market.”

“We believe that there is a role for us to play in that market. It’s more difficult to navigate for obvious reasons, but in pretty much any other industry and certainly in wind, there's always been one or two Western companies that have been able to participate, and the market generally accommodates them.”

Clearly, if there is one Western solar company that could make it in China; First Solar, as the largest solar manufacturer/developer in the US, would seem a plausible choice.

As for Indonesia, Malaysia and Thailand; these represent much smaller markets, according to Curtis.

“Indonesia just introduced a reverse auction mechanism, where people just bid in a price of power, then they allocate PPA's based on the price that is bid in,” he says.

“New countries in Southeast Asia such as Thailand and Malaysia have historically had, and are introducing a version of the feed in tariff. Thailand supported a lot of growth for about three or four years, but they changed focus and now they're looking at more distributed programmes; rooftops and community level. Malaysia has a feed in tariff that hasn’t really taken off yet.”

These three also have less attractive underlying conditions than those that make Australia, China and Japan great growth opportunities.

But in all of these markets, regardless of the driving forces of underlying conditions creating a good macro story - policy must also be in place initially, and for long enough to ensure that solar can scale up enough to drive down costs.