Solar Asset Management in 2021: Mitigating Risk, Ensuring Performance - SOLARNEWS
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Solar Asset Management in 2021: Mitigating Risk, Ensuring Performance
Table of contents
Team Details P 3.
Nomenclature & Acronyms P 4.
Introduction P 5.
The True Cost of O&M and Asset Management P 6.
Extreme Weather P 8.
Asset Bankability and Plant Performance P 10.
Digitalization P 11.
Closing Words P 13.
2
Team Details
Lisette Buist
Project Manager
lisette@solarplaza.com
Sid Eshuis
Business Developer
sid@solarplaza.com
Jason Deign
Contributing writer, Solarplaza
mail@jasondeign.com
Design and layout: Charl Visser
Disclaimer: This overview is provided by Solarplaza International BV (“Solarplaza”) as a service to its customers on an “as-is, as-available”
basis for informational purposes only. Solarplaza assumes no responsibility for any errors or omissions in these materials. Solarplaza makes
no commitment to update the information contained herein. This overview is protected by copyright laws, and may only be reproduced,
republished, distributed, transmitted, displayed, broadcast or otherwise exploited in any manner only by accrediting Solarplaza as the
source of it and providing a full hyperlink to https://northamerica.solar-asset.management where it was originally published.
Copyright © Solarplaza 2021 January
3
Nomenclature & Acronyms
DC Direct Current
KPI Key Performance Indicator
LCOE Levelized Cost of Energy
MWdc Megawatts (DC)
NERC North American Electric Reliability Corporation
O&M Operations & Maintenance
OEM Original Equipment Manufacturer
Opex Operational Expenses
PV Photovoltaics
ROI Return on Investment
SCADA Supervisory Control and Data Acquisition
SEIA Solar Energy Industries Association
4
Introduction
New technologies, growing portfolios, important to learn as much as possible from
tighter margins; now is an exhilarating trailblazers and industry leaders. To that
time for solar asset management in North end, Solarplaza’s Solar Asset Management
America. Continued cost reductions have North America has been tracking the key
consolidated PV’s position as the technology issues and topics in North American solar
of choice for many generation asset owners, asset management for the last seven years
and 2021 looks set to be a record year for and has become established as a critical
installations as COVID-19 restrictions lift platform for discussions around improving
and stimulus packages kick in. plant efficiency and profitability.
For asset managers, this means knowledge This paper captures the major themes of
acquisition and sharing is as vital as it ever Solar Asset Management North America
has been. The need to deploy new strategies, 2020, to offer an outlook of what awaits
processes and technologies rapidly at scale North American solar asset management
leaves little room for trial and error. So it is this year.
Figure 1: U.S. solar PV deployment forecast. Source: SEIA/Wood Mackenzie Power & Renewables U.S.
Solar Market Insight 2020 Q4.
5
The True Cost of O&M and
Asset Management
Once a solar plant has been commissioned,
its profitability is largely a question of
maximizing production and minimizing
O&M and asset management costs. But
evaluating the true cost of O&M and asset
management is not easy. Beyond in-house
costs, asset managers need to factor in the
impact of the labor rates of different types
of contractors, whether it is possible to
defer payments, how opex costs might be
folded into supplier agreements and so on.
“There’s often a misconception that if there
is a warranty in place, the O&M people
aren’t doing anything and the other guys
are doing it,” says Michael Eyman, managing
director of Origis Services, a subsidiary of
Origis Energy focused on O&M and asset
management for large-scale solar facilities.
“When something breaks, and you have
control of a site, your guys are engaged
in running the work order, scheduling the
guys coming out, doing the safety briefings,
overseeing their activities and cleaning up
the site afterward. Those work hours are
still hours that people must be paid for.”
Clearly, corrective maintenance still
involves costs for the asset manager
even when equipment is under warranty.
Furthermore, O&M costs can include
items such as round-the-clock monitoring,
project management teams, performance
engineers providing analytics, software
developers for data integration and
analysis, NERC and SCADA experts, high-
voltage technicians and much more.
6
These costs are sometimes categorized The issue of wage variances is particularly
under other headings, such as acute in distributed generation because
administration or operations. The issue is to of the high cost of urban technicians, he
reduce as many of them as possible. This can notes. Such factors are likely to become
sometimes be achieved through economies increasingly relevant in 2021 not only as
of scale, and some costs, such as labor rates, asset owners strive to drive down prices
might vary significantly by location. “We but also as developers ponder ways to make
look at the labor rates county by county in solar economics pan out with the gradual
some cases in California, particularly where loss of the U.S. Investment Tax Credit from
you have prevailing wage projects that 2023 onwards.
involve state funds,” says Eyman. “Where
you’ve got federal funds involved, there’s a
prevailing wage that has to be met. There’s
a federal schedule associated.”
Figure 2: Inflation-adjusted PV system cost benchmark, 2010-2018.
Source: National Renewable Energy Laboratory.
7
Extreme Weather
Reducing solar O&M and asset management significant unforeseen costs. And they
costs is challenging at the best of times, but are becoming more common: 2020 was
particularly so when dealing with extreme the sixth consecutive year in which 10 or
weather events. These have the potential more billion-dollar weather and climate
not only to cause catastrophic damage, disasters impacted the U.S., according to
halting production, but also to result in the National Climatic Data Center.
Figure 3: U.S. 2020 billion-dollar weather and climate disasters. Source NOAA National Centers for Environmental
Information U.S. Billion-Dollar Weather and Climate Disasters (2021). https://www.ncdc.noaa.gov/billions/, DOI:
10.25921/stkw-7w73.
The fact that extreme weather events Similarly, asset managers should be talking
cannot be predicted does not mean asset to insurers and OEMs. “Things like non-
managers should not prepare for them. disclosure agreements should be in place
For example, if there is a threat of an well before something hits, so you have
extreme weather event then it helps to someone to call immediately,” Tibbs says.
have in place contracts with suppliers that
might be needed for site assessments and On insurance, asset managers should be
remediation, says Lynsey Tibbs, project aware that the market has hardened as
manager of solar operations at Southern a result of growing weather events. This
Power Company. means insurance costs are rising, with a
8
consequent impact on opex. “Underwriters With microgrids, though, “one of the
have seen losses and are more concerned issues is that renewable energy is very
about specific issues,” says Sara Kane, variable,” says Scott Barrington, business
senior vice president of risk management development manager at Trimark
broker Beecher Carlson. Associates. “The way we deal with that is
having energy storage and having a tightly
A weather strategy should also include coupled system. One of the key components
details of when to stow sites and how to is a microgrid control system.”
ensure there are no loose items that could
be damaged. Stocks of oil, gasoline and Sophisticated control systems can allow
food should be procured, along with items microgrids to operate in a more or less
such as portable gensets. autonomous fashion when the wider grid
is impacted, allowing electricity to flow
Although extreme weather events usually whatever the weather.
represent a challenge for solar asset
management, they can also represent an
opportunity. Last year, for instance, solar
microgrids were cleared for use in all U.S.
regional wholesale electricity markets.
These are often configured to deliver
resilient electricity supplies in the event
of grid failures. In California, for example,
regulators in January approved USD $200
million for microgrids that can supply
power when the state grid is affected by
blackouts from wildfires.
9
Asset Bankability and
Plant Performance
Figure 4: Percentage of labor hours spent on different remediation activities.
Source: kWh Analytics, Solar Risk Assessment: 202.
From the minute a solar plant starts Some of the losses seen by asset managers
exporting energy to the grid, a key concern are recoverable, for example, when due to
for asset managers is to ensure it meets dust or vegetation shading. This category,
its performance targets. The U.S. industry which Heliolytics CEO Rob Andrews refers
as a whole suffers from an average 6% to as ‘scope 1,’ includes issues that can be
underperformance, according to research fixed and can be split again into limiting or
from kWh Analytics, a solar risk mitigation binary losses. An example of a limiting loss
firm. The level of energy loss is around 1% might be an incorrect tracker alignment,
to 1.5% across 50 GW of utility-scale plants which still allows for some production,
surveyed by aerial inspection specialist while a binary one could be something like
Heliolytics. an inverter failure, which stops operation
altogether.
Underperformance thus appears to be
mostly a problem for small systems, with Because of their all-or-nothing impact
figures from the U.S. Department of Energy on production, binary failures are given
suggesting a performance shortfall of up to priority in remediation efforts. And plant
8%. In any case, the numbers show a clear performance strategies generally should
trend towards asset owners and managers first seek to deal with scope 1 items, which
overestimating the likely performance of can account for 1% to 1.5% energy loss
their plants, with potentially significant within a project, Andrews says. However,
impacts on profitability. a growing concern as plants get older is
10non-recoverable performance or ‘scope Also, “what the site can actually do and the
2’ losses, such as long-term module financial model are rarely the same,” he
degradation or erosion of components. cautions.
“These are difficult to address because Financial models tend to be based on over-
they are not necessarily going to be optimistic assumptions from engineering
things that are going to impact on any consultants, according to Jon Previtali,
one stakeholder’s KPIs in any given year,” director of technology and technical
Andrews says. “However, these things services at Wells Fargo. The answer to the
can have a big impact on the long-term problem is for independent engineers to
performance of a project.” base their assumptions on the best possible
data—and to not compete with each other
on better estimates.
The situation started to improve a couple
of years ago thanks to aerial thermography,
Digitalization which allowed for all arrays on a plant
to be checked once a year with a single
flyover. However, aerial thermography
still involved manual processes, such as
reporting potential anomalies and creating
For some time now, digitalization has been work orders to investigate and deal
recognized as a major force for disruptive with problems. Today, digitalization has
change in North American solar asset resolved these issues through what is called
management. This is because digital tools condition-based aerial thermography.
have the potential to significantly improve
efficiency, flexibility and responsiveness Instead of carrying out annual or six-
compared to manual methods. According monthly flyovers based on a calendar
to Steve Hanawalt, executive vice president schedule, this involves timing each flyover
at Power Factors, the fact that 80% of O&M based on the thermal performance of
outlays are due to labor means that digital the DC arrays. “That helps time the aerial
strategies can deliver major reductions to inspection,” says Hanawalt.
LCOE, cutting costs by between 30% and
80%. Furthermore, when it comes to handling
the reports, “we do not ever go to paper,” he
As an example, 10 years ago many says. “We have an interface between these
asset managers performed annual tests aerial thermography inspection reports and
manually on 100% of strings. After five it pulls that data—including geolocation
years, it became clear that only around 2% of every module in the system—into the
of strings were failing a year, so manual platform. We can do a true ROI analysis of
testing started to be applied to a smaller when it makes sense to roll a truck.”
proportion of strings—around 2% to 10%.
That strategy did not work well, either, The system can even raise work orders
because random testing of a limited automatically. This can deliver a 19%
proportion of strings only offered limited ROI compared to managing aerial
scope for detecting failures. thermography manually. But compared to
11the 100% manual methods of a decade ago, “You can certainly schedule your washing
the benefit is 74%, according to a Power every March, every May,” says Nick de
Factors analysis based on a 125 MWdc Vries, vice president of technology and
plant. asset management at Silicon Ranch. “But
you can truly optimize when you start to
This is just one example of the benefits look at your data and say, can I predict that
of digitalization in O&M. More widely, there will be soiling? Should I wash rather
digital tools can help improve many areas than being behind the curve? This is where
of corrective, preventative and predictive we get into predictive maintenance.”
maintenance.
Figure 5: Economic benefit of digitalization of string testing, based on a 125 MWdc plant. Source: Power Factors.
12Closing Words
While many of the challenges facing asset management in 2021 are ones that the industry
has been aware of for some time, their relevance is increasing as the lifespan of plants grows
and portfolios get larger. The optimization of plant design and construction means that the
capital cost of solar is continuing to fall. Therefore, moves to reduce LCOE are increasingly
dependent on what happens during the operational phase of the plant.
In 2021, North American solar asset management will continue to be concerned with issues
such as insurability, underperformance, O&M strategies, plant health, component selection,
repairing and repowering, and coping with extreme events such as fire and hail. What will
change is that solar will have gone from being a minority player in the energy sector to the
driving force for new generation and employment.
According to the U.S. Energy Information Administration, 39% of all new power generation
in 2021 will come from solar, a higher level than any other technology. As all eyes turn to
solar this year, Solarplaza’s Solar Asset Management North America 2021 campaign will be
helping to ensure that the performance of the solar assets over their lifetime stays on track.
13More than 60.000 solar PV professionals and businesses from all
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