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Milan Koev of Hexagon Peak

· solar

We spoke with Milan Koev ahead of the Future Energy & Tech Investment Forum about solar project development and his new company, Hexagon Peak.

Milan last served at one of the biggest and fastest growing project developers and IPP companies in Southeast Asia - Sunseap Group as Vice President of International Business Development, where he was responsible for the project development and asset management divisions of the company, where he was involved in projects worth over US$1B. He was responsible for the development and overseeing the construction of some of the largest solar power plants in Southeast Asia, a 168 MW farm and subsequently a 400 MW project, both in Ninh Thuan, Vietnam. In addition to Vietnam, he was managing the project development activities for the company in the Philippines, Myanmar, Cambodia, Indonesia and India.

Before joining Sunseap, Milan acted as Vice President of Sales and Marketing in Asia-Pacific for one of world’s most prominent solar panel manufacturer - REC Group. He was overseeing the business entities of REC with 7 regional offices, managing 14 countries throughout APAC and was responsible for over US$200m revenue per year with a team of 25 key account managers. He has helped the company to establish long-term presence on key markets for the group such as Australia and Japan.

Q: Hi Milan, thanks for chatting with us. Tell us about your new venture, Hexagon Peak.

A: Hexagon Peak is a solar development and IPP platform, created to consolidate small project developers and their project pipelines into one, bigger pipeline, through acquisitions and partnerships in long-term and strategic solar markets, such as Japan, China, South Korea, Taiwan and Australia. We have established the holding company in Singapore only a month ago and we are targeting a confirmed pipeline of 50 MW within 2019 itself. The core Mission of Hexagon Peak is creating trust and longevity in all partnerships we enter, where we apply our values of establishing honest and pragmatic relationships.

A hexagon is the most efficient, least wasteful shape found in nature. The compressive characteristics of the shape allow it to be one of the strongest structures in the world - no other shape can create more space with less material. And this is exactly the strategy we will be applying at Hexagon Peak - creating the most opportunities out of our partnerships with mostoptimised resource.

Hexagon Peak also stands for the 6 revenue streams we will be generating with each kilowatt peak installed capacity - energy generation, EPC, O&M, renewable energy attributes and secondary trading and last but not least - solar plus agriculture projects. Of course there is a very long way ahead until we achieve the hexagonal structure on our balance sheet, but it is mostly a matter of time.

Q: Hexagon Peak is quite an early stage company, but you have many projects that you are working on through the acquisition of PolymeurSun. What are some of the projects in the pipeline?

A: We are really lucky to have established very promising partnerships with local industry participants in every country where Hexagon will be active. Some of these companies are either too small to be interesting for infrastructure investors or hedge funds - the traditional equity investors, or they have been focusing mostly on EPC, manufacturing of solar equipment or distribution. But they have done a great job creating a small pipeline of PPAs, which we are now consolidating in multiple countries around Asia Pacific in order to achieve size, which will become an “investable” pipeline.

PolymeurSun in particular is a strategic partnership, which gives us access to a track record of rooftop and off-grid projects in Singapore and Malaysia and strong experience based on highest EPC standards, which we can replicate in executing projects elsewhere in APAC.

Q: You have quite a lot of experience in the solar market. How has the subsidy driven solar pv market in China been effected by subsidies, and what can we expect when the subsidies end? Will they actually end?

A: There are professionals here at this event with much more experience particularly in China, so I wouldn’t be overconfident. But I do see the industry changing quite a bit. China’s domestic solar policy is unique in a sense that it is so powerful and able to define the directions of the industry dynamics all over the world. If not for another reason, it is purely because today probably over 90% of the solar panel manufacturing takes place in China itself.

So when China talks about subsidies for high efficiency panels, the whole industry shifts to mono PERC products. The scale is so significant that this transition moves with the speed of light.

The subsidies will indeed end - they have ended in other once world’s biggest markets in the past - say Germany for example. But this is the natural development of every new industry. Coal was (and unfortunately in some countries still is) driven and developed as an industry by heavy subsidies by governments. Nuclear as well. Now governments all over the world (including China) realise that the only way going forward is renewables. And solar is by far the fastest growing renewable energy source, with fastest adoption rate in new geographies, fastest reducing CAPEX. So when the subsidies do disappear completely, the industry will already be mature and strong enough to compete against all other energy sources. In fact in 2018 the most installed energy capacity is from solar and this is also the year of biggest FiT reductions, import tax duties and anti-dumping measures worldwide. It was quite messy year for everyone and yet 100 GWp of solar was installed.

The simple truth is - solar is already unstoppable. PPAs of 2 cents per kWh in the Middle East for example are unbeatable. If you look at the growth of the industry in the last 10 years and apply the same formula, in 12 years from now 100% of the global energy generation could be supplied by solar. Of course this can sound like a dream to many, but some 10 years ago when I got onboard of the “solar coaster”, it was a dream to have solar competing with conventional power. And today this is the reality.

Q: Which markets does Hexagon Peak see the most growth potential for renewable energy? Emerging markets (SEA etc.) or more established markets (US, Aus, Europe etc.)?

A: In the next 5 to 8 years we will be only focusing on Asia Pacific and on solar alone, so I wouldn’t make comments on Europe and the US or other renewables.

In Asia in the short and mid-term the most attention will be on the mature markets - Japan, China, India and Australia. India will have to achieve its promises, so its local industry is very localised and has already proven it is strong enough to survive all sorts of turbulence. Japan will be turning into direct bilateral PPAs due to the parity in energy tariffs of industrial and commercial entities with national FiT. So it will not make sense any longer to literally tear off mountains in order to build solar, which was the case till now. Australia is a hype with huge projects, which will cool down eventually, but it will remain a strong market in the next 3 years due to perfect economics for rooftop solar. I’m personally not so excited about the merchant models and all other gymnastics around securing PPAs for large farms, simply because it is a risky venture. And China will remain world’s biggest market at least until the so long awaited consolidation takes place and the government steps back, which is already happening as mentioned earlier.

In the long term Southeast Asia will be in darker shade on the solar map. Vietnam is setting the path, although it’s industry developments reminds me a lot of this in the Philippines unfortunately, where explosive pipelines create the feeling within the local authorities of overgenerous subsidies, which is definitely not the case, due to the relatively high risk with the local PPA. The other Mekong region countries will have to move towards solar sooner than later, because it doesn’t make sense anymore to have people living without access to electricity, while we have all the flexibility in sizing and location with solar and micro-grids.

Q: What do you think the next 5-10 years will look like in the energy and energy tech space?

A: Smart energy management and micro-utilities are the future. As of today there are over 150 companies worldwide investing in blockchain technology for energy related matters. In 10 years we will probably have very high efficiency, smart modules, with integrated battery and inverter capabilities. The transition into decentralising energy is already happening and the grid networks will have to start adapting to the new reality.

To find out more about Hexagon Peak, you can check out their Linkedin Page, or their website.

Want to hear more from Milan? He will be part of one of the panel discussions at the Future Energy & Tech Investment Forum at PwC Innovation Centre in Shanghai on March 27th, 2019.

To register at YooPay (China):

To register at EventBrite (Outside of China): click here

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