Originally appeared in Solar Power World Magazine.
By Glenna Wiseman, Solar Power World Contributor
Solar plant owners and investors face a daunting task calibrating all the levers of solar asset ownership to reap a strong ROI. Our dialogue related to the operation, maintenance and management of solar photovoltaic plants now turns to the tools available to help investors manage dispersed solar assets across a worldwide, inconsistent and fluctuating solar landscape.
Edmée Kelsey (Kelsey) is the CEO of 3Megawatt, which provides solar asset management software to manage solar portfolio risk and reduce asset management costs. BluePoint, the company’s offering, is now used to manage over 1 gigawatt (GW) of solar assets globally.
Twitter: Kelsey @edmeekelsey; 3Megawatt @3megawattsolar
Haresh Patel (Patel) is the CEO of Mercatus, a leading solutions provider for the energy finance industry. To date Mercatus solutions have empowered over 11 gigawatts of solar projects for appraisal and screening, enabling over $250M in transactions.
Twitter: Patel @hpatelmercatus; Mercatus @gomercatus
Vassilis Papaeconomou (Papaeconomou) is the managing director of Alectris, a global service provider for the integrated care of solar photovoltaic (PV) energy assets. ACTIS, the company’s award winning solar asset management and monitoring platform, is used in more than 350MWp worldwide.
Twitter: Papaeconomou @VassilisPapa; Alectris @Alectris
Robert Pfatischer (Pfatischer) is the managing director of meteocontrol, a global firm with 8.8 GW under monitoring management. Meteocontrol markets products in the energy and weather data management areas.
Leigh Zanone (Zanone) is the director of sales and marketing for meteocontrol in North America. He has reduced the LCOE (levelized cost of energy) on plants ranging in size from 2kW to 100 MW and has been involved in the performance review of more than 1.5 GW of total capacity.
What are the critical operations and maintenance problems or challenges faced by distributed generation (DG) commercial and industrial solar investors now?
Kelsey: The challenges include lack of standards, methodology and transparency, ambiguity of division of responsibilities between roofing companies and O&M service providers, access issues (for example access to schools is more restricted then commercial roof access), emergency response times are not really economical for small DG systems, switching speed and cost from non-performing O&M service providers to an alternative provider, the question to include corrective maintenance in service contract or not and asset tracking for spare parts.
Patel: In our work with solar investors, we’ve seen four major challenges. The first is a lack of transparency into operations and financial reports for the funding partner. If you’re a funding partner, you want regular financial and operational reports from the asset manager on an ongoing basis. Unfortunately, few asset managers have the capability to automate this process. The result is funding partners who are frustrated that they can’t get the information they need on a timely basis and asset managers who are overwhelmed by requests for reports that often have to be manually generated.
If you’re the funding partner, you have significantly less information than the asset manager. You also may have some qualms about the accuracy of the information you’re receiving, since it’s being assembled by the asset manager before you receive it. The process is clunky and lacks the transparency that both sides would probably like to have.
That issue comes directly from the second problem, which is that there’s no standard method for keeping financial or operational records. Every company has their own method and system. We also often see that financial information is stored in one database while operational information is kept somewhere else. The two sets of information are interrelated and should be easily accessible in one system.
The last two issues are both related to historical data. Investors want historical information so they can make informed funding decisions. We’re seeing solar companies compile their historical data manually, which makes scaling a serious challenge. That manual process has created a dearth of the kind of historical data that’s needed to obtain long-term debt or to tap into funding in the capital markets. Without that historical data, rating agencies can’t evaluate projects, secondary investors can’t get in the game, and primary investors are reluctant to put big money into tranches of small projects.
Papaeconomou: Efficient management is a key component for maximizing the financial returns. Maintenance may have some peculiarities depending on the location of the asset (for example in desert areas), but the biggest challenge, I believe, is the number and complexity of tasks (whether administrative, financially or technically related) that need to be accomplished. This applies especially for fleets of a large number of assets, for example, in the DG case.
Pfatischer: The main challenge is to be fast and effective even with a large number of systems or subsystems. Short reaction times are predefined. On the other hand costs/prices are under pressure. So to secure fast reaction on every malfunction and to register every loss of power, but to keep costs on a low level is not easy. Only using sophisticated tools and procedures will enable effective operation management.
Zanone: Challenges include understanding variability of costs over time, understanding the current quality of their project when taking ownership of an asset, dividing lower than expected production into the correct categories which include weather variability, component disruption or failure, chronic underperformance that will not be observed with simpler monitoring platforms, and curtailment or power control commands and their effect on production. Additional challenges include reliance on customer data networks, finding service providers who will work 7 days a week, finding national or international partners that have resources to provide work regardless of the location, second level purchasers of portfolios have disparate systems for monitoring and O&M and finding capable field service agents experienced in PV troubleshooting in less popular and newer markets, like the Midwest and southeast.
How do these challenges differ regionally in the primary solar markets?
Kelsey: The challenges are very similar in regional markets. Access issues are more of a challenge in the U.S. for schools (need for fingerprinting personnel) and in Europe for building integrated PV and barns.
In Europe many EPCs have assumed the O&M function to be able to guarantee performance. Not all EPCs have the right business model in place to be able to do long term O&M on a cost effective basis. In the U.S., O&M is typically done by a specialized O&M company. As a pure play, this means that these companies are typically set up better to perform O&M. This means that investors in European solar assets may need to start thinking on how they would approach switching O&M providers, if needed.
In the U.S., average system sizes are smaller than in Europe. This means that in Europe is more economical to set up a larger footprint in a geographic area. Also, the concentration of DG assets by geographic area is higher in Europe, which makes truck rolls more cost effective. This means that in the U.S. investors may need to work with multiple regional O&M players, whereas in Europe they can work with a few large country specific O&M players. If an investor needs to work with multiple O&M players, it is important to enforce standardization as much as possible to facilitate the portfolio overview.
Patel: We see these same issues in nearly every region. Regional differences tend to exist at the compliance level. Projects can have subtle and more nuanced differences across regions.
Papaeconomou: Apart from some technical peculiarities depending on the location of the asset (e.g. desert areas as mentioned previously) the main challenge is very similar. The tasks that need to be completed in different regions of the world may be quite different, but the challenge remains mastering the volume of such tasks, in an integrated and coherent approach. These tasks may seem fairly simple if one looks at them individually, but the full list thereof makes their efficient management a real challenge.
Pfatischer: In Europe O&M is a growing business. System operators do become aware that a PV system needs professional O&M 7 days a week. But because of decreasing new installations it is also becoming a very competitive business. In the U.S. O&M service was a requirement from the beginning especially with commercial and utility scale plants. But in Asia up until now O&M service and sometimes even monitoring is not an issue. This will change in future.
Zanone: In California and the southwest there is limited weather variability and limited shading from vegetation. However, because of lack of rainfall, soiling measurement can affect yield by 8-20%. For Midwest and East Coast plants vegetation is a major issue. Weather also has a much larger variability level day to day, month to month, and year to year.
What challenges do your solar O&M tools or offerings solve for the solar asset investor?
Kelsey: 3Megawatt’s BluePoint solar asset management platform helps solar investors to standardize reporting amongst their O&M providers. BluePoint will also put in place a common methodology for O&M providers for certain tasks like claim and warranty processing. Investors will gain more insight into the timing of preventative and corrective maintenance. The service history that is built up in BluePoint over the lifetime of the asset will make it easier for investors to switch O&M service providers, if necessary.
Patel: Our platform addresses all four of the issues that I mentioned. We provide transparency into both the financial and operational functions. We also provide a conforming and standardized storage system for records. They can all be easily accessed in one central database. With regard to historical data, our system automates the process. That eliminates the need for manual data construction and allows for companies to scale that process. Finally, automated data generation means that companies are able to build up a more robust repository of historical results, which allows investors to participate in projects with a higher degree of confidence.
Papaeconomou: We have developed a worldwide unique and award winning software platform called ACTIS. You can call it a “Solar PV ERP.” The software is basically a suite of applications for monitoring, service and asset management. This approach is unique in that all the information is generated and stored in a single database in a fully integrated manner. We have created interfaces for existing monitoring system to allow investors to keep their current monitoring system investments, especially if they are happy and satisfied with them. In our platform the service activities, the measurements from the monitoring and the financial asset management activities and reporting are tightly interconnected eliminating the need for the use of different software packages and/or custom spreadsheets. Real time information is available for all three modules allowing full insight of the overall operation of the asset through one single platform.
Pfatischer: Meteocontrol offers professional tools, designed for long-term operation of large numbers of systems/subsystems. As we are in the market for more than 20 years and as there are also in-house users, we are able to develop exactly the features needed including overall evaluations and reporting to the investor, alarm management and ticket system, management of on-site service, very detailed analysis capabilities, logging and documentation of all events and access on different levels independent from location.
A professional tool is needed to be able to register and react on any problem. It is the basis to be effective and therefore to reduce specific costs per kWp.
Zanone: Our entire QS program increases yield production by 4-6%. It is integrated with professional Independent Engineering and Audit services along with Operational tools and services for a holistic single provider bundle.
Our software services allow for observation and repair of chronic low level underperformance: typically regarding DC module, and string issues. It can import from most other monitoring hardware, and our hardware can export data to most other software systems. Portfolio level analysis and reporting is included, along with automation of those metrics to reduce asset manager’s analysis and reporting time by 60-80% on a monthly basis. Investor focused reports that divide issues into categories to limit liability and root cause conversations with owners’ investment partners. Ticket aggregation and time stamping allow asset owners to observe average aging and repair time for different failure categories and plant locations.
How do you see solar O&M tools shaping future solar investment and portfolio management?
Kelsey: As the solar asset class is now attracting more professional equity, new investors will expect the same level of professionalism and diligence as they are used to in other asset classes. This means that they will increasingly demand professional tools that will help mitigate risk and improve performance of their investments.
Patel: The greatest opportunity for advancement is increased transparency. Automated generation of data and insights will allow external partners to access the information they need when they need it. That will help them make faster funding decisions without waiting for data to be manually produced and then passed through a clunky chain of managements. When external partners can make faster and more informed decisions, we’ll see the capital flow accelerate and costs of capital come down.
Papaeconomou: There is no doubt asset owners are becoming increasingly aware of the importance of a reliable and precise monitoring system. This is evident from the recent GTM study which reported that last year monitoring system installations exceeded for the first time the new installed capacity of solar PV plants. I firmly believe, that the next step is the integration of all information for all three areas, monitoring, service and asset management, very similar to an ERP system, allowing the best possible insight on the asset operation. Only by having the complete information available is it feasible to optimize the financial returns of the assets in an efficient way.
Pfatischer: Professional O&M tools and service will become a must in all markets. Like in other sectors there will be global and local players. Investors active both in PV and wind would like to have an integrated view (under development by meteocontrol…). In general the costs of ongoing operation will become more important regarding financial calculations.
Zanone: In several ways including curtailment, storage, portfolio level analytics and PPA pricing. Coming from Europe, where curtailment is a much larger factor in systems of all sizes, we see this as an inevitable change to the U.S. market as penetration levels increase. Having monitoring and O&M systems that can also provide active, reactive and ramp up power control to all inverters such as ours is going to become more important. O&M providers will have to operate and maintain a larger suite of technology for storage. As portfolios become larger, having analysis of a single site will become difficult. It will be important to slice and filter portfolios by location, technology, size, and service personnel.
Finally, in our technical due diligence advisement services, we have seen several PPA contract and O&M contracts where the pricing is not sustainable given the rate and cost of maintenance. Making sure the PPA prices account for the real cost of 25 years of operations will help limit the default of developer or O&M providers and maintain stability in the expectation of plant performance.
Glenna Wiseman has been a solar marketing executive since 2007 and is the founding partner of Identity3, a leading woman-owned communication firm, helping brand builders identify, reach and create awareness with solar and environmentally conscious consumers, with a special focus on women. Her expertise includes work with companies along the solar supply chain from manufacturers to installers, financing entities to solar O&M providers and across continents to international firms making a U.S. market entry. Twitter: @GlennaWiseman; @Identity3Co. Email GWiseman@Identity3.com.