Managing and operating solar assets: Five key considerations

August 23rd, 2019, Published in Articles: Energize

PV was supposed to be like any other energy source: You invest in the infrastructure and then it pretty much runs itself from thereon. But US solar asset owners have found that is not the case. The landscape for PV operations keeps changing. This article discusses five trends which could have a material impact on your business.

On one hand, changes to tax rules may threaten the profitability of existing plants. On the other, new technologies create opportunities to improve production and revenues. In essence, plant owners have to keep a keen eye on developments to stay ahead of the game.

New commercial structures and investors

Solar used to be the domain of large utility off-takers and major financiers. That’s no longer the case, though. Today’s solar plants are almost as likely to be destined to satisfy a corporate power purchase agreement (PPA) as they are to deliver energy to a utility. According to a Bloomberg report, in November 2018 just five technology companies – Google, Facebook, Microsoft, Amazon and Apple – had signed corporate PPAs for a total of 8 GW of clean power between them.

That’s equivalent to the output of eight nuclear reactors [1]. The corporate PPA market is one of the fastest growing sources of new demand for US solar developers. US corporate renewable PPAs tripled in 2018 to 8,5 GW, to represent more than 60% of deals, Bloomberg New Energy Finance (BNEF) said in a report published in January 2019 [2]. And new models are still emerging.

Fig. 1: Corrective maintenance tickets by system component (EPRI, PV Evolution Labs).

In June, for example, a Spanish firm broke new ground with Europe’s first large-scale PPA for a crowdfunded plant. Holaluz, a clean-energy retailer, signed up to take the output from up to 75 MW of solar capacity to be built over the next three years by Fundeen, a specialist renewables crowdfunding platform, in Spain and Portugal [3].

The digitisation of PV

Addressing issues such as structural failures is becoming easier with the advent of new digital technologies. Adding data monitoring to solar plants can be valuable in uncovering string and inverter-level impacts. And analysing data is becoming more important as inverter and other equipment makers add more intelligence to their products. A software error, for example, could easily lead to inverter or tracker malfunctions that might go unnoticed without regular monitoring of output.

Furthermore IT, along with systems that can store excess power, can help improve the match between solar output and demand. In this respect, there is interest in using blockchain technologies as a way of letting asset owners sell extra power from solar direct to others on the grid. Blockchain companies such as Electron, LO3 Energy and Power Ledger are building trading platforms that can let such trades take place, with data stored on blockchain.

There is even a cryptocurrency, SolarCoin, that asset owners can earn with every watt they produce. “You can think of SolarCoin as the Bitcoin for energy,” says François Sonnet, co-founder of ElectriCChain, a blockchain venture linked to the crypto scheme.  As solar power carries on growing, a further focus area for the sector is how to manage massive plants at low cost. Here, too, tech trends can help. There are moves to use digital twins to forecast plant failures before they happen, for instance.

Technical optimisers

The profitability of solar plants is being continuously upgraded by new technologies. Solar inverter makers, for example, have been rushing to bring battery-ready products to market for several years as energy storage takes off in the US. Companies such as SolarEdge Technologies of Freemont, CA, and Wind & Sun Technologies (WSTech) of Germany have introduced battery-friendly products to cater for growth in energy storage. And even without taking batteries into account, inverters play a key role in plant profitability and operations and maintenance (O&M). Recent research has shown there are large differences in performance between major inverter models, with up to 25% failing to operate correctly after temperature stress tests, for example [4], see Fig. 1.

The research also showed an 11% difference in energy yield between worst and best-performing models. Performance issues are said to be an even greater inverter problem than failure rates [5]. Beyond inverters, there are a number of other technologies that can make a significant difference to O&M costs. One of the most interesting is drones, which can be used to carry out panel inspections more quickly and efficiently than human teams. US utility Duke Energy, which owns and operates 600 MW of PV capacity, has conducted drone inspections since 2015. The company now deploys drones supported by machine learning across its US solar plant fleet [7].

Developments in energy storage

Energy storage represents perhaps the most important trend currently affecting the US solar market. Rapid falls in solar and energy storage costs and rising renewable energy capacity have triggered a boom in US PV-plus-storage projects, New Energy Update reports [8]. PV-plus-storage projects are spreading from Southwest markets into eastern and northern states and starting to compete with gas-fired generation. PV developers are building storage capacity to maximise the value of solar assets. Co-locating PV and storage systems reduces installed costs by 8% for DC-coupled system and 7% for an AC-coupled system, according to a study by the National Renewable Energy Laboratory [9].

Fig. 2: Global benchmarkets for PV, wind and batteries (BNEF).

Energy storage looks set to become an increasingly indispensable addition to solar plants as the cost of batteries continues to fall. According to BNEF, at the end of March 2019 the benchmark levelised cost of electricity, or LCOE, for lithium-ion batteries had fallen 35%, to $187 per MWh, since the first half of 2018 [10]. Elena Giannakopoulou, head of energy economics at BNEF, says the LCOE for lithium-ion battery storage “has dropped by 76% since 2012, based on recent project costs and historical battery pack prices” [12].

The need for standardisation

Contract standardisation has long been seen as critical in helping the US solar industry to achieve scale, by helping to streamline the legal processes surrounding plant development. In August 2017, the Solar Energy Industries Association (SEIA) released a model contract to pave the way for more development of solar in the commercial and industrial (C&I) sector. The model PPA for commercial customers was developed by SEIA’s C&I Working Group and vetted by some of the top law firms, development entities and financiers in the US [13]. Perhaps coincidentally, the market for corporate PPAs has subsequently exploded across the US, as noted above. America is now by far the biggest market worldwide for corporate renewable energy PPAs, accounting for 9,1 GW out of 13,4 GW globally in 2018.

Elsewhere, the industry is striving for standardisation in other ways as well. In June 2019, for example, it emerged that a new draft of the NSF/ANSI 457 Sustainability Leadership Standard for Photovoltaic Modules is due to be released at the end of the year [14]. This would look to establish product sustainability criteria and corporate performance metrics. The US PV manufacturer First Solar has said it will apply for certification under the standard in 2020 [15].

Outlook and conclusions

As the solar market continues to mature, it is experiencing myriad impacts as a result of new technology, enhanced processes and regulatory change. Tracking these trends is essential for asset owners as the industry wrestles with uncertainty over the future of the Investment Tax Credit (ITC) and the impact of solar tariffs on Chinese modules, to name but two current concerns. All of the five areas covered in this report have the potential to deliver significant benefits to plant owners. And, in the medium to long term, they could all help contribute to the continuing cost reductions that solar will need to rely on in the absence of support schemes such as the ITC. Staying on top of developments in each of these fields, and others that may also have an impact on profitability, is not easy, though.

References

[1] A Hirtenstein: “From Google to Facebook, Big Data Is Driving Green Energy Shift”, Bloomberg, 13 November 2018, www.bloomberg.com/news/articles/2018-11-13/google-facebook-drive-green-power-developments-with-ppa-deals

[2] “US corporate renewable deals triple in 2018; Saudi Arabia tenders for 1.5 GW of solar”, New Energy Update, http://newenergyupdate.com/pv-insider/us-corporate-renewable-deals-triple-2018-saudi-arabia-tenders-15-gw-solar

[3] J Deign: “New Ground: Spanish Firm Signs PPA for Crowdfunded Solar Plant”, Greentech Media, 11 June 2019, www.greentechmedia.com/articles/read/spanish-firm-signs-ppa-for-crowdfunded-solar-plant#gs.igey4r

[4] E Foehringer Merchant: “The Undervalued Importance of Solar Inverters: An Examination”, Greentech Media, 3 June 2019, www.greentechmedia.com/squared/the-lead/examining-the-undervalued-importance-of-inverters

[5] Ibid.

[6] “2019 PV inverter scorecard”, PV Evolution Labs, www.pvel.com/wp-content/uploads/PVEL-2019-PVInverter- Scorecard-1.pdf

[7] “Duke Energy deploys AI-drones over PV fleet to boost operating gains”, New Energy Update, 21 November 2018, http://newenergyupdate.com/pv-insider/duke-energy-deploys-ai-drones-over-pv-fleet-boost-operating-gains

[8] “US PV-storage developers face new revenue, opex decisions”, New Energy Update, 5 June 2019, http://newenergyupdate. com/pv-insider/us-pv-storage-developers-face-new-revenue-opex-decisions

[9] Ibid.

10 “Battery Power’s Latest Plunge in Costs Threatens Coal, Gas”, BNEF, 26 March 2019, https://about.bnef.com/blog/batterypowers- latest-plunge-costs-threatens-coal-gas

[11] Ibid.

[12] Ibid.

[13] “SEIA Announces New Model Contract to Simplify Development and Open Investment Capital”, SEIA, 30 August 2017, www.seia.org/news/seia-announces-new-model-contract-simplify-development-and-open-investment-capital.

[14] B Beetz: “New global sustainability standard for solar modules in the works”, PV Magazine, 4 June 2019, www.pv-magazine.com/2019/06/04/new-global-sustainability-standard-for-solar-modules-in-the-works

[15] Ibid.

Contact Luke Brett, New Energy Update, luke@newenergyupdate.com

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