WHITE PAPER ///

Small Steps to Big Returns

Best Practices for PV Asset Optimisation
from Conception to Operations

Author:
Mina Mesbahi
Solarplaza
 WHITE PAPER /// Small Steps to Big Returns
Best Practices for PV Asset Optimisation from Conception to Operations

Table of contents

Team Details P 3.
Nomenclature & Acronyms P 4.
Introduction P 5.
Optimising Levelised Cost of Energy (LCOE) P 6.
The (Cost) Devil is in the Details P 7.
Important Early O&M Considerations P 9.
Challenges Specific to Australia P 10.
Closing Words P 12.
Endnotes P 13.

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 WHITE PAPER /// Small Steps to Big Returns
Best Practices for PV Asset Optimisation from Conception to Operations

Team Details

Lisette Buist
Project Manager
lisette@solarplaza.com

Mina Mesbahi
Research Analyst
mina@solarplaza.com

Irene Rodríguez Martín

Partnerships & Social Media
irene@solarplaza.com

Jens van der Laan

Account Manager
jens@solarplaza.com

Design and layout: Charl Visser

Disclaimer: This overview is provided by Solarplaza International BV (“Solarplaza”) as a service to its customers on an “as-is, as-
available” basis for informational purposes only. Solarplaza assumes no responsibility for any errors or omissions in these materials.
Solarplaza makes no commitment to update the information contained herein. This overview is protected by copyright laws, and may
only be reproduced, republished, distributed, transmitted, displayed, broadcast or otherwise exploited in any manner only by accrediting
Solarplaza as the source of it and providing a full hyperlink to https://australia.solar-asset.management where it was originally published.

Copyright © Solarplaza 2019 April

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 WHITE PAPER /// Small Steps to Big Returns
Best Practices for PV Asset Optimisation from Conception to Operations

Nomenclature & Acronyms

BOS Balance of System

CAPEX Capital Expenditure
FMEA Failure Modes and Effects Analysis
ITS Inverter Transformation Station
kWh Kilowatt-hour
LCOE Levelised Cost of Energy
MW Megawatt
OPEX Operational Expenditure
PPA Power Purchase Agreements
PV Photovoltaic
ROI Return on Investment
RPN Risk Priority Number
VRE Variable Renewable Energy

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 WHITE PAPER /// Small Steps to Big Returns
Best Practices for PV Asset Optimisation from Conception to Operations

Introduction

“To weather the test of time, the project needs to be cemented with the right
foundation at the early stages to bolster long-term success.”

As solar installations continue to proliferate The need for cost-reduction strategies

and given the current cost-conscious climate of
the industry, where equity returns are far more
dependent on the reliability of the system,
asset optimisation is crucial to ensure long-
term bankability. Instrumental in achieving
optimum operations and maximum ROI, is a
low Levelised Cost of Energy (LCOE). This is
the metric that allows for the comparison and
benchmarking of conventional energy sources
versus VREs. The system LCOE also accounts
for the integration costs (i.e. BOS costs), as
shown in figure 1. Particularly in the case of
connectors and PV cabling, both with respect
to the product itself and handling/ assembling,
there are additional costs to be taken into
account and these components play a pivotal
role in the financial success of these assets
- since energy is ultimately flowing through
the connector - and are a major influence on
efficiency and LCOE.
has been a topic of deep interest and will
continue to be one. Nevertheless, the bigger
question is: how can we find the sweet spot
between profitability and reliability? There
are substantial returns to be made from taking
small steps when building and operating a solar
project. The conundrum is, of course, that “go
big or go home” has a better ring to it. However,
in the case of solar PV, getting the small things
right is what will help you hit a home run. This
white paper synthesises the details you need
to pay attention to during the conception,
construction and early operation phase of a
solar PV system to ensure an optimum LCOE
and performance, and to reduce the number of
baked-in issues within the system.

Figure 1: System LCOE of VRE= Sum of their LCOE plus integration costs per unit of VRE generation.

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 WHITE PAPER /// Small Steps to Big Returns
Best Practices for PV Asset Optimisation from Conception to Operations

Optimising Levelised Cost of Energy (LCOE)

LCOE is defined as the sum of the costs over the

CONCEPTION

lifetime of a project divided by the sum of the

energy produced over the same time period.
Therefore, the costs are comprised of not
only the capital (CAPEX) required to build the
project, but also that required to operate and
maintain the system (OPEX). LCOE can be used
as an index in relation to any electricity source.
In the case of solar PV, however, there are three
main perspectives associated with LCOE. With Where,
/respect to approving a loan, lenders tend to N= PV system life (expressed in years)
focus on the reputation of the sponsor as well CAPEX= Total initial investment/ capital
as the bankability of the entire chain involved expenditure (expressed in €/ kWp)
in the investment. From the perspective of the
OPEX= Annual O&M expenditures (expressed
loan-takers who choose not to opt for equity,
in €/ kWp)
sponsors take the cost-benefit analysis of the
project into account. Lastly, the asset managers RV= Residual value (expressed in €/ kWp)
focus on the production downtime the project r= Discount rate (expressed in %)
is susceptible to, due to the fact that the longer Y0=Initial yield (expressed in kWh)
the production is interrupted, the higher the D= System degradation rate ( (expressed in %)
LCOE will be.

Instrumental in shoring up operations is the quality of a brand’s aftersales in addition to costs at

the procurement phase. In other words, the project could very well experience more downtime,
and hence a worse LCOE in the long term, when merely focusing on cost minimisation at the early
stages. At its crux, LCOE optimisation is about CAPEX optimisation and OPEX minimisation.

Case Study
-Inverter transformation station (ITS)-
Vector Cuatro, a company of Falck Renewables S.p.A, conducted a case study, comparing
two projects from their portfolio to better identify the financial impact of inverter selection
in various phases of a project’s life cycle. Project B used a solution that cost 9% of the total
EPC price, which was approximately 30% more expensive than Project B. The average
costs for preventive maintenance of any type of ITS is 18% over the lifetime of a project on
an O&M contract, granted they are similar in characteristics. It was observed that Project
A experienced a cheaper LCOE as it entailed lower EPC costs. However, with regards to
the corrective maintenance costs and warranty extensions, selecting a cheaper ITS led to
incurment of substantial unplanned expenses by about 54%. Overall, Project A ended up with
higher expenses, despite having had lower initial costs, and ultimately a higher LCOE cost,
pointing to the importance of taking into account OPEX when optimising LCOE.

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 WHITE PAPER /// Small Steps to Big Returns
Best Practices for PV Asset Optimisation from Conception to Operations
The (Cost) Devil is in the Details
In addition to LCOE, there are other elements
CONSTRUCTION
baked in the solar project that can jeopardise
its bankability and long-term success. These
elements are of different priorities, based
on the level of the risk they pose, referred
to as Risk Priority Number (RPN) according
to the Failure Modes and Effects Analysis
(FMEA). This analysis is conducted by the Solar
Bankability Project, an EU-funded project with
the goal of creating a common professional risk
assessment practice with a focus on economic
impact. In the FMEA, the risks are assessed on
the basis of the three categories of severity,
occurrence and durability.
The solar bankability project identified
wrong/absent cable connection as the
most financially impactful failure during
the operational phase of a solar PV system.
GTM Research also conducted a study for
two consecutive years, reporting that one-
third of failures in a PV system was related to
cabling. The reason why cabling play such a
pivotal role is its responsibility of transmitting
power from the module to the inverter with
a low contact resistance of the connectors,
which is the cornerstone of optimum and
safe operations. Second to cabling is the high-
risk potential of burnt connectors. For each
connection, a plug and socket are required,
each of which are comprised of a plastic and
a metal part. Connectors tend to be deployed
in large numbers. According to Olivier Haldi
from Stäubli, a Swiss mechatronics company,
about 700k connectors are installed in a 100
MW project. As earlier stated, constant low
resistance is the backbone of operational
efficiency and a high resistance inside the
connectors will result in high temperatures
and thus power loss, negatively affecting the
contact resistance again and creating a vicious
cycle of high risk for potential connector
failures. Such failures bring about a number of
consequences, including higher expenditure
on service hours and spare parts, hotspots or
even fire in some cases and so forth.
In order to better mitigate the risks and
consequences touched upon earlier, it is
important to understand their underlying
drivers. On a component level, the quality and
reliable performance of the connector over
the years are instrumental when selecting
the upstream components. Every connector
is made of different contact technology
dimensions, product material and processes,
and what truly determines a quality connector
is a low and stable temperature and contact
resistance. Naturally, utilising low-quality
connectors runs a high risk and can significantly
raise the contact resistance. Although contact
resistance will sooner or later result in
connector failure and the aforementioned
consequences, knowing and predicting when
this will happen is next to impossible.
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 WHITE PAPER /// Small Steps to Big Returns
Best Practices for PV Asset Optimisation from Conception to Operations

With respect to installation, cross-connection

- defined as a mismatch between two different
connectors - is another field to pay attention
to in order to avoid the occurrence of the
risks and consequences covered so far. Cross-
connecting can bring about not only technical
but also legal risks and high costs to address
disputes as it is not always clear which party is
liable. Another source of defective installation
is false crimping, which can be avoided by
deploying certified crimping tools.

To better gauge product quality, Stäubli

recommends not solely relying on the
manufacturing datasheet, but approaching
component quality assessment in a similar
vein as that of modules and inverters, taking
performance processes, reputation, track
record and bankability of the manufacturer
into account.

“Cabling and connectors may seem like small details, but the devil is in the details.
When not done right, these elements can strongly hurt the balance sheet and
bankability of the project in the long run.”

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 WHITE PAPER /// Small Steps to Big Returns
Best Practices for PV Asset Optimisation from Conception to Operations
Important Early-stage O&M Considerations
At the commissioning stages, the EPC to O&M
OPERATION
handover period represents an inflection point
while reflecting on early to mid-stage O&M.
It is recommended to involve your selected
O&M team as early as possible, since they
tend to observe and catch certain elements
often missed by everyone else. For instance,
as discussed previously, there are hundreds
or even thousands of connectors installed in a
given project and in panels that are mounted
before trenches are dug for cabling, these
connectors will be left awaiting connection. By
virtue of not being covered, the connectors are
subject to becoming filled with dust. This can
be avoided by bringing in an O&M perspective
early on. Additionally, proper documentation
of the project is critical, particularly in cases
where the EPC is providing the early-stage
O&M services. Uniting the asset manager, EPC
and O&M service provider in order to align and
get a conversation regarding incentives going,
is also important to take care of early on.
One of the aspects to consider is the washing
economics of the market, particularly in
markets with desert-like climates such as
Australia. According to Nicolás Rossel, it is
important to answer a number of questions to
gain better insights into the realities of your
market, including:
ÎÎ As an operator, are you dealing with
subsidies or a free market?
ÎÎ Is the project selling to the spot market or
does it have a PPA?
ÎÎ Who will be the chief responsible and
better-equipped party to handle the cleaning?
On one hand, the operations manager
evidently has access to the day-to-day
conditions and is much more familiar with
weather patterns and can hence determine the
optimum cleaning schedule. On the other hand,
the asset manager is better positioned when it
comes to the financial realities of the project
and thus for making an economically sound
argument answering the golden question of “to
wash or not to wash?” and, “if yes, then when?”
Therefore, the best result can be achieved only
when the communication lines are running
smoothly between these two parties.
Not every market has the weight of all the
existing technologies and services behind it,
especially as far as remote project sites are
concerned. The reality of the extent of the
scope of the available services can turn out
to be more sobering than anticipated, setting
forth the need for thorough research when
entering a new market. Another point of
reflection, and potentially the most critical one,
is safety. Although solar technology is not too
complex, there are still a number of challenges
to navigate through, which should be treated
with special care to ensure the safety of the
technicians.
Now, let’s talk maintenance management
systems and address the fact that, in the
year 2019, Excel sheets are just simply not
an acceptable tracking system anymore.
Digitalisation has had an immense impact on
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 WHITE PAPER /// Small Steps to Big Returns
Best Practices for PV Asset Optimisation from Conception to Operations

how solar assets are managed and maintained

across the globe. AI and advanced data
analytics have enabled pattern recognition,
machine learning, fleet performance analysis,
predictive performance, and so forth. Going
digital is the name of the game and having
proper CMMS capabilities in place will make
all the difference. This plays an even more
instrumental role for the long-term success of
the project when the project is modeled and its
data entered into a CMMS at the foundation
stages. Building on this, during the first two
years of the project, which are also referred
to as the mortality stage, things are bound
to break and fall apart. Therefore, it is highly
beneficial to get your supply chain ducks in
a row to provide easy access to spare parts
storage to minimise downtime, in particular
for remote projects.

Challenges Specific to Australia

Surprise Guests

The Canadian Solar team in Australia has had a few surprise encounters with brown snakes
sneakily roosting in some of the actual equipment. They even had to deal with an endangered
species in one instance, which required weaving additional environmental protection into the
policy management plan to protect this species.

Suffice it to say, dealing with supply chain
logistics, and managing resources can make
for a convoluted task, given how isolatedly
located most large-scale projects are. Figure
2 showcases the disparity and location of the
biggest operational projects in the country.
Distances between some of the sites can run
up to 400 kilometers. In terms of accessibility,
a unique challenge specific to Australia is
the solar power being taken to Aboriginal
communities in more remote parts of the
country.

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 WHITE PAPER /// Small Steps to Big Returns
Best Practices for PV Asset Optimisation from Conception to Operations

AUSTRALIA

1130,80
MW

Northern
Territory
Western Queensland
Australia
South
Australia New South Wales 410
ACT MW

15,00 Victoria
435
21,50 MW
58 MW MW
MW

Figure 2: Cumulative capacity of Top 35 Operational Projects in Australia per state

Another challenge facing the Australian proper placement and monitoring of

market is the rising temperatures, making for ventilation systems. In addition, as earlier
difficult and unpleasant labour conditions. The highlighted, finding the right technicians at the
equipment can also get very hot, necessitating right locations can be demanding.

“The Australian solar PV market, being in its infancy, posits certain

challenges. However, in every challenge lies an opportunity. The majority
of risks attached to operating and maintaining solar plants do not vary
significantly from one market to the other and Australia can really capitalise
on the learnings from other successful international markets.”

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 WHITE PAPER /// Small Steps to Big Returns
Best Practices for PV Asset Optimisation from Conception to Operations

Closing Words

Details play a big role when mitigating risks affecting the LCOE and ROI of solar PV systems.
Zooming in on the conception phase, low-quality components can lead to losses in performance,
safety and -at times- legal issues. This compels the question of whether developers, asset owners
and operators can really justify the very insignificant cost-savings when deploying low-grade
components, considering their significant impact on long-term bankability. During the construction
phase, proper cable management, and adhering to installation norms and assembly instructions are
important points of consideration. Once the project is operational, what really drives performance
is having proper O&M processes in place to ensure maximum plant availability.

It is never too early to start optimising your assets. To meet and learn from the best of the best, join
us at the pre-eminent Solar Asset Management Australia, fully focused on the optimisation of solar
plants and portfolios, taking place in the Emerald City of Sydney on June 26-27.

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 WHITE PAPER /// Small Steps to Big Returns
Best Practices for PV Asset Optimisation from Conception to Operations

Endnotes
System LCOE: What Are the Costs of Renewables?, Accessed at
https://www.neon-energie.de/Ueckerdt-Hirth-Luderer-Edenhofer-2013-System-LCOE-Costs-Re-
newables.pdf.

Solar Bankability Project, Accessed at

http://www.solarbankability.org/home.html.

Solar Bankability Improving the attractiveness of solar PV investments, Accessed at

http://solarbankability.org/fileadmin/sites/www/files/documents/Final_event/David_Moser_Cre-
ating_a_cost-based_Failure_Modes_and_Effects_Analysis__FMEA__for_PV.pdf.

PV Investment Technical Risk Management, Accessed at

http://www.solarbankability.org/fileadmin/sites/www/files/documents/Solar_Bankability_Final_
Report.pdf.

Optimizing LCOE - The impact of reliable materials and components, Accessed at

https://europe.solar-asset.management/webinar/#recordings.

Best Practices in Photovoltaic System Operations and Maintenance, Accessed at

https://www.nrel.gov/docs/fy17osti/67553.pdf.

Recapping the Australian Utility-scale Solar Market and O&M Best Practices for Optimum
Performance, Accessed at
https://australia.solar-asset.management/webinar#recordings

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 WHITE PAPER /// Small Steps to Big Returns
Best Practices for PV Asset Optimisation from Conception to Operations

Upcoming events

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(5th edition) (7th edition)
Tokyo, Asia Frankfurt, Germany
30-31 May 2019 30-31 October 2019

Solar Asset Management Australia Solar Asset Management MENA

(New event) (New event)
Sydney, Australia Dubai, UAE
26-27 June 2019 End of November 2019

Solar Asset Management Mexico Solar Asset Management North America

& Central America (7th edition)
(2nd edition) San Francisco, USA
Mexico City, Mexico End of March 2020
8-9 October 2019

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