Article originally appeared in PV Tech Power Magazine.
Operations and maintenance | The maturing of the solar operations and maintenance business has shone a spotlight on the need for some universally accepted standards and practices across the industry. Vassilis Papaeconomou explains why such a step forward will be vital to ensuring the full value of solar assets is realised.
PV technology is a rather old technology and has been around for some decades. The solar PV market started in Europe and its large-scale deployment followed a few years later primarily in Germany in the early 2000s and a series of other European countries including Italy, Spain and Greece. The early days of the market were based on feed-in tariffs (FiTs) as many countries adopted that strategy based on its successful implementation in Germany.
During the first growth phase of the market stakeholders were focused on development and construction, while long-term experience on the operation of solar PV assets was nil. Consequently, there was no clear perception of the value and importance of operations and maintenance (O&M), not only from the investors and lenders, but also on the part of the EPCs themselves.
O&M was considered as a “checkbox“ to achieve financing and was initially perceived as a burden by the EPC contractors, a pure cost centre for the owners and a formal necessity from the lenders. The pipelines were rather small in megawatt (MW) size as well as plant count, geographical concentration and O&M by definition being tied to the EPC contractor.
It is obvious under these circumstances that there was no space for a pure O&M market, not only due to the above reasons, but also because O&M’s value was not properly weighted to its contribution to high-performing solar assets. Much has changed since the early days of the solar PV market. Solar PV is now a booming source of renewable energy across the globe and a key solution in the nations’ vision to fulfill the Paris COP21 climate change agreement.
Now the market sees the long-term operational necessity and bankability factor in solar O&M, or better said, in some cases, the absence of it. Solar PV plants constructed in the beginning are getting older and the lack of maintenance and/or quality design and construction are becoming evident. Such adverse effects are heavily impacting the generated revenues of solar assets and creating a lot of headaches for investors and lenders. Even in well performing PV plants, owners are struggling to decrease overall costs as the market is shifting from the FiT scheme to tender-based markets, with cutthroat pricing competition.
In the past few years we have experienced the birth of a new market segment – the independent, third-party O&M market – where O&M contractors are striving to increase the quality of services, while decreasing costs. The management of a large number of assets is becoming a challenge due to the complexity associated with that task. Most people still under-estimate the challenge. The reason is the operational part of O&M activities is rarely fully understood and most discussions are based on the maintenance tasks alone, neglecting the effort needed to manage such activities (and a lot of additional ones) to a large extent.
This new market is experiencing steady growth, with more clarity related to the definitions, activities and performance-enhancing expectations related to O&M investments. Another factor is the (very often overestimated) potential of the O&M market as a business. New companies are entering the market, while others are leaving either by going out of business or by being acquired by larger groups. O&M is in a transitional phase, where finally the importance of quality O&M services is better understood, mainly due to experiences with bad cases. But the market still lacks a significant track record, even in the older markets in Europe, let alone in emerging solar markets such as Africa, India and even Japan.
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