The Key to Solar Bankability in Emerging Markets
Investors are looking for a guarantee that the facility will continue to be a good investment long after the construction is complete.
Having a solid operations and management plan plays an important role in any successful long term solar project. Plants that are being built in emerging markets are no exception. In fact, given the lack of solar resources in these areas, operations and maintenance (O&M) and asset management are arguably more important here. If a solar EPC firm wants to improve the bankability of their project to secure investors, they must demonstrate that they have a plan for the successful long term operations and management of a solar facility. In many cases this will involve a partnership with an outside O&M company, who have the knowledge and expertise to ensure smooth operations once the system is up and running.
Investors are looking for a guarantee that the facility will continue to be a good investment long after the construction is complete. A solar facility will ideally last for over two decades. So, it is vital to demonstrate a strong O&M plan, based on the highest industry standards and adherence to the best practices of the industry to increase the bankability of the project.
What makes this so important to investors?
- It demonstrates a long term commitment to the project.
- It increases confidence of compliance with both local and international operational standards.
- It ensures quality monitoring of sites in distant markets.
- It optimizes the operations of the plant.
- It guarantees solar delivery at the same level as in mature markets.
The Importance of Long Term Commitment to Solar PV Assets
Demonstrating to investors the strength of the firm’s long term commitment to the project is key to developing investor confidence in a project. The time it takes to build the facility is a drop in the bucket when compared to the time that the plant will be producing power. An investor will be looking for the assurance that the facility will be properly managed in the years to come.
A clear O&M plan in the proposal offers the assurance of quality, responsiveness, and reliability long after the EPC has moved on to the next project. This will go a long way towards increasing the bankability of the project.
Compliance with Local and International Operational Solar Industry Standards
Investors want to be confident that their projects will not be subjected to any undue hold ups or fines due to noncompliance with industry standards. Providing a reliable professional expert in O&M with experience in standardized contracts, and a knowledge of best practices will go a long way toward instilling investor confidence.
Emerging markets often have few local solar resources. The O&M team can provide training to local workers, but it will take a long time for them to learn the complex detail that go into monitoring and managing the operations of a PV plant.
Solar Monitoring and Incident Response Time
A unique aspect of solar projects in emerging markets is that they tend to be far away from the typical resources available for troubleshooting. Monitoring will depend on a team that is typically not on the ground at the site, with few, if any, local providers to pick up the slack.
A company with a proven monitoring and response record will increase investor confidence in the project as a whole. With the knowledge of best practices to address any situation that may arise, even identifying potential problems and addressing them before they cause any damage, increases the confidence of investing in these markets. The solar monitoring system is crucial for proper operation and maintenance activities.
Turning Solar O&M from Cost to Profit Creation
Emanuele Tacchino, Business Development Manager at Alectris, said the following during the Making Solar Bankable podcast. “At Alectris, we usually say that the goal is to turn what is currently perceived as an operating cost, an O&M cost, into an additional source of profit for the investor. So having the right commitment and mindset is really the key not only for emerging markets, but in general for every sort of market all around the world.”
With proper monitoring and alert systems in place to address the diverse environmental conditions of the projects, the clients can be guaranteed that their system will continue to provide optimum output.
Limited Local Solar Specific Resources
Emerging markets in solar provide a challenge not only in the distance they have from established solar markets and the available resources, but also in working in unfamiliar physical conditions. An experienced O&M company with experience working in diverse conditions has the ability to study and adapt their practices to the environment while at the same time remaining committed to upholding the standards of current market conditions. The ability to provide flexibility is crucial in addressing any unforeseen issues that arise.
Making Solar Bankable Takeaways
The key to increasing the bankability of a project in an emerging market is to include a strong O&M component in the proposal. The EPC and the O&M companies must be very knowledgeable in international standards and compliances. They must also learn the local requirements, and adapt accordingly. With all of the expertise that will be evident in the proposal, investors will be more likely to bankroll the project.