Where the solar industry has experienced explosive growth, new challenges are emerging. The maturation of this renewable energy source includes such initiatives as lowering plant maintenance costs, delivering on investor expectations to ensure investment community trust and ascribing asset value in an M&A driven market. Within these opportunities lies a pivot point. One in which the so-called operations and maintenance “fix it guys” are evolving into the champions of solar PV plant asset value.
How can operations, maintenance and asset management activities lower maintenance costs? How can this scope of work protect investor value? How can we become the catalysts or champions of solar performance?
To get an insider’s view of the economics of solar plant operations and the effects of operations on maintenance costs and asset value, Solar O&M Insider recently spoke with Tom Tansy, chairman of the SunSpec Alliance and Laks Sampath, U.S. country manager for Alectris, a SunSpec member and contributor to its standardization efforts in the industry. For the full discussion listen to the podcast or reference the transcript here.
Defining Solar PV Plant Operations
Finetuning definitions and the scope of work and best practices ascribed to them is being addressed by several organizations globally. The SunSpec Alliance has been contributing to standardization efforts since its inception in 2009.
“Our mission, in a nutshell, is to develop information standards for the solar industry,” said Tom Tansy, chairman of the SunSpec Alliance, a trade group of more than 100 solar and storage distributed energy industry participants.
The group’s Best Practices in Solar PV O&M guidelines has identified these key areas related to plant operations:
- Plant Monitoring
- Administration of Operations
- Conducting Operations
- Directions for the Performance of Work
- Operator Knowledge, Protocols, Documentation
The alliance has “devoted an entire section to plant operations. The Appendix E provides sample descriptions of various activities related to the scope of work for plant operations and plant maintenance,” pointed out Laks Sampath of Alectris who is contributing to this SunSpec initiative. “The main aim of the operations team is to minimize truck rolls and effectively schedule any work needed so that there is very little interruption in the energy production, which is what these plants are supposed to be doing,” continued Sampath.
Strategies to Reduce Solar PV Plant Maintenance Costs
“The refinement of best practices has to do with diving into all the particular conditions that you might see in the field,” said Tansy. This refinement process is best initiated at the development and design phase of the plant. However much can be done in the post construction phases as well.
Here are several ways in which operations can lower the maintenance / OPEX cost of a solar plant:
Minimize Truck Rolls
“The idea really is to minimize truck rolls overall which you can do by dealing with operations and maintenance in a proactive basis,” said Tansy. “If you know to check on certain items according to a certain time interval then, of course, you can knock out many of the activities that you may need addressing in a single truck roll. It’s about optimizing your boots on the ground and minimizing the need for boots on the ground by getting ahead of it. Just in the same way that you’d maintain your car by taking it for scheduled maintenance.”
Optimize Truck Rolls
Advance maintenance planning should include optimizing how you access these plants. The types of logistic issues should include optimal routes to access the plant. “Because at the end of the day if you have people sitting in trucks, driving out long distances to the plant, that costs money too.” Explained Tansy.
Some plants may need to take preserved or environmentally protected landscape areas into consideration. Certainly, these issues are dealt with comprehensively in the development and design phases. Other considerations include time of year, seasonal weather patterns and their impact on transportation. The opportunity is to optimize such traffic and logistics considerations early for reactive and preventative maintenance. “All these different types of activities about how to optimize the expenditure of resources to make sure that the plant is returning what it needs should really be the focus of O&M professionals,” concluded Tansy.
Get the Right Person for the Right Job for the Right Amount of Time at the Right Price
This sounds easy, right? However, as Tansy and Sampath point out there are a considerable number of factors affecting this one aspect of maintenance.
These factors include:
Effective data analytics and root cause analysis is critical to lowering maintenance cost. Two questions need to be answered by the plant operator before dispatching the “Boots on the Ground” (i.e. Field Services), explained Sampath.
- What is the root cause of this issue?
- Can this wait until I roll a truck next time. Essentially, what is the economic impact of this issue?
Deploying the right tech at the right price for the right amount of time. Tansy explains: Here is a relatively simplistic example but it’s one that many people have encountered. In the old days, when something broke you’d dispatch a guy, typically a guy, in a truck to go fix whatever was broken. They might take care of cutting the grass or whatever while they’re at it. Let’s say that the guy in the truck is a certified electrician. And so now you have him cleaning panels and basically pulling weeds on the plant. His assigned wage grade fully loaded, depending upon where you are, is going to be somewhere between say $30 and $100 per hour. So, you don’t want that person dealing with vegetation issues.
“Getting the right person for the right job at the right time is a great way to save money but more importantly, and this is the point of the new SunSpec O&M cost model that we’re debuting, is to look at this as investment. What’s your return on that investment? What is your internal rate of return for your investment in O&M?
If you turn the equation on its head and say this is an active investment rather than a cost center, you look at things in a whole different way. So, getting the right person for the right job and paying them for doing the task that they are equipped to do is one of the principal ways that you can make this investment work,” explained Tansy.
Here is an example from the U.S. portfolio Alectris operates related to a common type of “truck roll” incident, ground fault errors.
Sampath explains: At one of our 20-megawatt plants one of the 20 inverters went down. Trying to find a ground fault is not an easy task. It’s important that the operator is knowledgeable and is able to interpret the data that they’re seeing and able to identify what the issue is accurately.
“The last time this happened for us on this 20-megawatt plant, we were able to direct the boots on the ground, or the field technician, directly to the one combiner box we suspected was having a problem. Sure enough, when they opened the box, there was arcing. They had to splice the wires and get the plant back up and running. The comment made by the field service provider was, ‘I can’t believe you guys actually identified it down to the combiner box.’ That saved a huge amount of money, because according to him, ‘For me to test everything on this inverter, like all the strings, would have taken me half a day or more.’ That is savings. Providing a certain amount of budget towards plant operations, to make sure that the maintenance costs are lowered is critical in the long run.”
A Note on Designing Out Maintenance Cost
The SunSpec Alliance work with manufacturers is resulting in maintenance costs being designed out of solar plant components.
“We have been socializing the work that we’ve done on the O&M cost modeling with vendors,” said Tansy. “Manufacturers have taken a look at the cost model, including inverter, string combiner box, cabling and other manufactures and they have evaluated against their own products. And they said, if you design your product in this specific way then you can eliminate steps X, Y, and Z. By proper design, you can eliminate certain activities that you may otherwise have budgeted for thus reducing overall cost.”
Strategies to Substantiate Asset Value and Build Solar Investor Confidence
The SunSpec Alliance has been working on standardization and other initiatives related to solar securitization and financing for the last four years. The accumulated knowledge has resulted in understanding how investors perceive the difference risks and investment criteria associated with a solar power plant. Tansy outlined risk perceptions: Investors look at the components and satisfy themselves the components work pretty well. They look at the duration of the contract, which is going to be 15 or 20 years and then they say, ‘okay, the stuff works great and we’ve seen degradation curves. It seems to have worked for a long time. But there are mechanical components. Are the people going to be there in time to keep this thing running?’
Key strategies owners and operators can deploy to substantiate asset value include:
Standardizing Contract Terminology
“Standardizing the names and the terminology around operations, maintenance and asset management activities has been another key savings,” explained Tansy. “This standardization of terminology results in the ability to encode into standardized contracts. As an asset owner, you’re able to evaluate basically like for like. This is a big question that investors and plant owners have is the assurance they are getting similar service from one operator to another.”
Administration of Operations / Record Keeping
“If we could provide one piece of advice for the solar industry it is to keep records from the very beginning,” advised Tansy. “From SunSpec’s work in finance and securitization, what we’ve determined, is that where the investors see the risk is in the long-term operations of these plants. And where the risk starts is if you have incomplete records. You know, how was it built, who operated on it, etc. So again, that’s another big component here, I think, is just coming up with better methods for handling record-keeping so that you can verify actually what was done and operate with some confidence that your plant is in good shape for long-term.”
Sampath pointed out the Alectris Solar ERP, ACTIS, provides the integrated set of software and record keeping tools needed in the industry now to clearly and easily document maintenance, operations and asset management activities.
Performance Track Record
“There are two questions to ask when acquiring an existing plant,” Sampath outlined. “First, how well has it been performing? In other words, has the plant operator done a good job ensuring year-to-year kilowatt hour production? And secondly, how well has it been maintained? Again, maintenance has to do with how effectively has the plant operator ensured proper, preventive, and timely corrective maintenance of the plant. It’s all about production. If your production is not up to par, your asset value is not going to go anywhere at all.”
Operations and Management Industry Catalysts of Solar Asset Value
A horizon point or vision of what the O&M and asset management industry can be for the global solar industry is emerging. “People involved in O&M and asset management are really kind of tired of being looked at as the fix-it guys, because they can do so much more,” said Tansy. They can be the catalysts or the agents who drive value. That’s why the topic of looking at asset management and O&M as an investment, as opposed to the cost center that it has traditionally occupied, is taking shape in the industry.”
The 8th Annual SunSpec Alliance Member Meeting
The SunSpec Alliance will be hosting their 8th annual member meeting March 30 in San Francisco.
The event will focus on three key areas for the industry:
- Grappling with Grid Integration: Advanced Inverter and Protocol Challenges. “We’ve been working quite a bit with advanced function inverters and the rollout including what’s happening here in California, New York, and Hawaii,” said Tansy.
- The second major topic is Asset Management 2.0: Efficiency, Integration, and Automation. Embedded within that is the operation and maintenance topics. SunSpec will be rolling out the second edition of national best practices co-developed with NREL and Sandia. The alliance will also be providing a sneak preview of thier O&M cost model web application. Laks Sampath of Alectris will be on this panel.
- The third key topic is Scaling Up Solar Finance: Standards To Reduce Soft Costs and Expand The Market. SunSpec is a contractor to the U.S. Department of Energy on the Orange Button Initiative. The alliance is developing the interchange standards for financial data. The financial data includes lots of different topics associated with O&M and asset management, “which is really a critical risk element that needs to be looked at and mitigated within the whole financing context,” explained Tansy.