301 Moved Permanently

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A boom trails off, leaving an aging population increasingly in need of long-term care. Of course, we’re talking about photovoltaic power plants.

Just as health care is a growth industry in the U.S., the provision of operations and maintenance (O&M) services is emerging as an important field for the PV sector. The allure of the market can be summed up in two words: “recurring revenue.”

Pundits will argue whether the heyday of large-scale solar power plants has already reached its apex. While many vast PV plants are still just breaking ground, the major impetus for their completion - the end of the investment tax credit (ITC) in 2016 - is clearly on the horizon. The U.S. Energy Information Agency sees a sharp decline in the amount of multi-MW-scale PV construction coming with the ITC sunset, with the caveat that new tax policies and regulations such as the Environmental Protection Agency’s (EPA) proposed rules limiting power plant carbon emissions may yet sustain new construction of large-scale PV for decades.

Nevertheless, there is no doubt that demand for O&M services will only increase with time. Power purchase agreements for the electricity from existing and new-build PV power plants will keep the facilities online for decades to come. With money flowing along with the electrons, many different types of firms are positioning themselves for long-term success in after-market PV.

 

Hearts and minds

ESA Renewables started as a full-service EPC provider and, early on, decided that it would also want to get into the O&M business. The company considered that it was building a lot of these sites on their own. It seems reasonable to suggest that the people who build the sites would be qualified to maintain them.

“We understand how they were engineered, how they were constructed,” says Tammy Rhode, O&M manager at ESA Renewables, explaining that it was a fairly natural evolution to assume the O&M contract for plants it had built. “Then we decided that we not only wanted to provide O&M services for projects that we built and wanted to retain the O&M contract for, but to provide the services for projects that we didn’t build.”

Of course, ESA doesn’t produce the components of the plants themselves. Any conversation about O&M quickly turns to the inverters, variously described as the brains or the heart of any PV plant. Certainly, the inverters comprise the single most important element of PV plant operations.

For reasons of competence and warranty protection, O&M providers must have certified inverter service personnel either on the payroll or under contract. There are lots of inverters out there, and each manufacturer has its own certification program and requirements.

Rhode says the first step for ESA as an O&M provider was for its electricians and service personnel to receive training and certification from the manufacturers they specified in the projects it built.

“We began with our preferred inverter manufacturers for procurement,” she says. “We decided that we would go in and get full training on their products. Not only from an installer’s perspective, but from an operations and maintenance perspective as well.”

As ESA stepped up to offer O&M services for owners of PV plants it had not built, the company expanded its range and relationships with inverter manufacturers that it had not worked with on an EPC basis.

“We then began to get in and get training and certifications on their projects as well,” Rhode says. “We became factory-authorized service providers for other inverter manufacturers.”

The significance of the inverter as the source of a PV plant’s operational health is not lost on the inverter manufacturers. It is not a tremendous leap from providing field service for their installed systems under warranty to expanding those services to other aspects of the facility.

Chuck Smith, executive vice president of service for the Americas and Asia-Pacific at SMA America LLC, says the importance of the inverter is a key reason why the company elected to pursue O&M services. Not only is the inverter manufacturer best positioned from a technical standpoint to maintain its equipment, he says, but it is able to get the most out of the inverter in terms of output.

“For us, as an inverter manufacturer and service provider, expanding now into the O&M plant level, our warranty is based on proper preventive maintenance being done,” he says. “These are some very sophisticated pieces of equipment operating out in the harshest environments - right out there in the middle of the desert. And they need to be taken care of.”

Smith estimates that about 80% of the alarms in a power plant come through the inverter - about 50% of those have something to do with the inverter, while the other 50% are some balance of system issue. As a company, he says, SMA realized that it had a unique competency, not just in the service domain, but in its understanding of the information behind the data coming from the inverter.

“As we started to put more assets out there from an inverter manufacturer standpoint, we started realizing that two fundamental things were occurring,” Smith says. “We were seeing the construction firms - the EPC firms - being held accountable for the initial couple of years under O&M contracts - sometimes, maybe up to five years. It was more of just a hook from an owner and bank perspective, to make sure that the plant was going to be operational at the specs they were asked to build it. But we were not necessarily seeing real competency on how to optimize the power production of a plant.”

Optimization is emerging as an important differentiator among O&M service providers. Italy-based Alectris, a provider of O&M and asset management services for PV plants in Europe and North America, considers optimization as a key element of its business strategy.

“In an emerging market like O&M for solar PV, where there is still lack of standardization, there are numerous companies presenting different approaches and concepts,” says Ken Kostok, O&M manger for Alectris in the U.S. “Although the performance of an O&M contractor obviously is tightly connected to the asset’s performance optimization, the evaluation of the contractor’s capability to perform and even excel in the contractual obligations is a more complex process.”

As solar portfolios grow larger with more dispersed assets, the company is seeing a boom in fleet-level monitoring.

Kostok says Alectris has developed an O&M evaluation tool with 85 discrete items that are related to PV plant functions. This tool enables the company to identify issues relating to plant performance as an asset and to mobilize a cost-effective response. It also assists in preparing preventive maintenance plans for minimizing the number of problems that crop up in the first place.

The ability to intelligently monitor PV plants with an eye toward optimization is driving a new class of O&M service providers. New Jersey-based Locus Energy, a provider of solar monitoring and data analytics systems and services, is focusing its efforts on using the information that plants provide - mainly through their inverters - to help deliver the best performance possible.

“We certainly see more companies specializing in the more managed O&M,” says Adrian De Luca, head of marketing and project delivery for Locus Energy. “This presents a fantastic opportunity for companies to really look at the underlying data and use some analytic techniques to really help O&M providers manage those assets better.”

Locus manages so much data on behalf of its clients - which run the gamut of O&M providers and asset managers - the company’s software developers have put a lot of effort into analytics to help determine why PV plants perform the way they do. Instead of pouring a team of engineers into a problem to understand what is happening, the software provides the horsepower.

“This helps O&M providers be more efficient at spotting problems faster and prioritizing them,” De Luca says. “You can better determine which problems are having an impact on the revenue returns of the system and tag those for immediate action.”

 

Who turns the screw?

While the information side of the O&M services market offers a wide range of metrics for understanding what is happening at a PV plant, at some point somebody has to go out into the field to get things done.

ESA’s Rhode says the company’s origins as an EPC contractor has served as a natural evolution into its O&M services business. “My philosophy - and the company’s philosophy - is to treat every project as if we built it,” she says.

This engineering-oriented approach means that the company has to look beyond the inverter. A storm-damaged solar panel or breached perimeter fence has to be fixed as well. As ESA expands its relationship with plant owners past the construction phase, it is finding that O&M is taking on a life of its own.

“As O&M has grown for us, it has sort of become more independent from the EPC side,” Rhode says. “Even if we aren’t necessarily building projects, we are taking on more and more O&M projects.”

While Rhode says the company tries to offer O&M services everywhere, the company wants to build and grow in the regions where it is already performing services. At the same time, ESA does not want to preclude growth in other areas.

As a rule, ESA tries to develop regional hubs to serve promising regions outside its existing corporate locations. Such a starting point might include a warehouse for parts and supplies. The company might hire electricians and staff members in certain areas to work from storefronts. As those areas grow, Rhode says, the company might further build those hub stations into full-fledged corporate locations.

“The majority of our O&M staff are ESA people,” Rhode says. “We do build and have relationships with others in specific areas. Again, it depends on the responsibilities on the project. I may have minimal responsibility on a project but still want an experienced solar or electrical engineer available in the area. I have instances where we have retained experienced personnel from the EPC phase of a contract. If we do not have a great responsibility in a particular region or area, we would use someone like that if we needed assistance on an O&M contract.”

Wherever possible, ESA wants its logo on the trucks it rolls and personnel it puts on-site. “Obviously, we have branding,” she says. “I want everybody to know it’s us out there.”

According to SMA’s Smith, providing O&M services requires dedication and resources. The company has made a $6 million investment in three regional solar monitoring centers for the U.S., Europe and Asia-Pacific region.

“We’ve got some aggressive goals here at SMA to not just be a ‘me too’ O&M provider, but to change the game out there and try to bring this into a level of sophistication that it needs to be at,” Smith says. “At the end of the day, it comes down to risk mitigation. Who can secure the cash flow for me over the next 20 years?”

Rhode says the key to providing effective O&M services over time is to not only appreciate how plants function today but how they will be functioning years from now. Moreover, the provider is going to have to change with the industry, as new technology in the form of string inverters and micro-inverters for larger projects comes into play and distributed generation solar takes over from large, single-site plants.

“The longer we are in this business, the projects really are varying more and more,” she says. “Being that we had started in this business operating and maintaining projects we had built, this is where it becomes a little more complex, where we get into projects where we didn’t provide the engineering, that we didn’t have anything to do with procurement. Those are where we see a little more challenge.” R