Part 1 of a three-part look at the importance of solar PV operations-and-maintenance.
By Glenna Wiseman
The number of solar PV installations in the United States that are maturing into a post-warranty stage is a heavy foot on the pedal of the solar operations and maintenance (O&M) industry.
“The sheer size of the solar industry is driving O&M maturation,” said MJ Shiao, director of solar research at GTM Research. GTM says worldwide the operations and maintenance (O&M) market for megawatt-scale PV plants will total 146GW by 2017.
The number of systems online and aging, along with third-party ownership, means owners are motivated to take care of these systems.
Such growth is both a problem and opportunity, creating business prospects for independent service providers birthed here in the United States and those moving across the Atlantic from the more mature European marke. Inverter companies are eyeing O&M as a new revenue source, and traditional engineering, construction, procurement firms (EPCs) are fostering O&M specific divisions as they complete warranty period O&M contracts. The market is also driving new events including the upcoming conference and exhibition Solar O&M North America in San Francisco, staged by Solarplaza.
Multi-megawatt installations take a more sophisticated view of O&M, making sure it’s part of the project from the beginning from the engineering to design phases. Residential solar builders are increasingly adopting O&M strategies, such as the Clean Power Finance residential O&M program. Shiao sees one of the major opportunities in distributed generation or DG. His definition of DG includes both residential and non-utility scale commercial.
“We like to think PV is maintenance free but it is not,” Shiao says “We certainly put solar PV in a different category than traditional energy sources, which means there may be examples that can be used to advance solar O&M.”
Cedric Brehaut, principal consultant at SoliChamba, highlighted solar O&M market drivers as the life cycle maturation of U.S. solar assets and the resulting expiration of warranty coverage. He also discussed the growing sophistication in investment models, leading to assets changing hands or being sold.
In addition, he sees a developing balancing act between an engineering perspective and its drive for optimal energy performance with the asset managers’ eye on financial performance.
“Solar plants are first and foremost financial assets,” Brehaut says. “There are risks to overlooking that they are financial assets.”
For example, optimal production may cost too much in terms of technical onsite support and may not be needed for optimal return on investment. The flip side of this coin, of course, is that if you don’t do the maintenance, you can have sub-optimal asset performance.
Is There a Difference Between O&M and AM?
In the nascent solar photovoltaic O&M industry, definitions fly around and become muddled by lack of standardization. Take for example the terms operations and maintenance (O&M) and asset management (AM). These two terms are seemingly aimed at the higher context of providing a solar owner with the asset’s prescribed energy performance and the expected return on investment. Yet these two terms, while they fuse at some point in the value chain of O&M vernacular, prescribe specialized skill sets delivering on a continuum of the investor’s scope of work requirements.
Authored by Cedric Brehaut of SoliChamba, the GTM Research report, “Megawatt-Scale PV Plant Operations and Maintenance: Services, Markets and Competitors, 2013-2017” issued late last year draws lines in the sand to better define these two industry terms.
It states: “In the PV industry, the term “operations & maintenance” (often abbreviated as “O&M”) describes a set of activities, most of them technical in nature, which enable power plants to perform their task of producing energy in compliance with applicable rules and regulations.
O&M is sometimes considered as a subset of asset management, which consists of the financial, commercial and administrative activities necessary to ensure that the plant’s energy production translates into the appropriate revenue stream.”
GTM identifies the five major goals of solar O&M throughout its report as:
- Optimization of plant production for increased asset revenue
- Reduction of risks for asset owners and investors
- Protection of asset value and longevity
- Compliance with applicable regulations (e.g., those set forth by the grid operator or environmental governance bodies)
- Transparency on plant production, performance, issues, risks and O&M activities
Asset management consists of financial, commercial and administrative activities necessary to ensure the plant’s energy production translates into the appropriate revenue stream.
“Managing PV assets includes O&M and asset management, or ‘blue collar’ and ‘white collar’ functions,” says Stefano Cruccu, project manager of Solarplaza, organizers of the event Solar O&M North America.
This definition views these terms through a not too dissimilar prism, although O&M itself has a direct impact on the financial revenues of plants, the O&M provider (blue collar) focuses on the technology issues and has the overview from this perspective, whereas the asset manager (white collar) focuses purely on the financial — non technical — side of the asset, often managing a portfolio instead of just one asset.
It’s important for both the O&M provider and the asset manager to understand each other’s perspectives because these two are highly interconnected. Cruccu cites this mutual understanding as the main reason why the event Solar O&M North America focuses on both the so called ‘blue collar’ and ‘white collar’ aspects of O&M.
Standardizing O&M Best Practices
Just as the industry is evolving, so too are best practices. On the federal level, the reduction of soft costs including O&M are the subject of such entities as Sandia National Laboratories with upcoming 2014 O&M workshops this spring and the National Renewable Energy Laboratory (NREL), focused on technical aspects of O&M standards development.
On the trade side is the alliance SunSpec Alliance. Alliance Development Director Tim “TJ” Keating has spent six years in the solar industry, tackling solar finance, operations and business development. He is intent on developing solar O&M best practices.
“We are working with the industry and interested groups such as Sandia and NREL to develop best practices and standards for solar O&M,” said Keating. As Keating explained, the SunSpec approach is based on investment care-abouts, or the perspective of the investment community on what constitutes best practices in solar O&M. This approach starts with the “solution in mind” i.e. the practices accepted by the investment community.
Shiao of GTM Research also sees financiers driving O&M best practices pointing to their influence in the development of standards as they become more knowledgeable in this maturing market sector.
Glenna Wiseman is the founder of Identity3, a marketing services company leveraging the unique marketplace identity of solar, renewable energy and green economy companies to fuel their growth. She is also the co-founder of Women4Solar. Like Women4Solar on Facebook, LinkedIn and on Twitter @Women4Solar. Email her at GWiseman@Identity3.com.