Continuous Improvement of Solar PV Plants

Transcription

1 Whitepaper Continuous Improvement of Solar PV Plants Author: Vassilis Papaeconomou Managing Director Alectris Date: October 12, 2013 v G Doc ID: WP-G02

2 Disclaimer The information contained in this document is the proprietary and exclusive property of Alectris except as otherwise indicated. No part of this document, in whole or in part, may be reproduced, stored, transmitted, or used for design purposes without the prior written permission of Alectris. The information contained in this document is subject to change without notice. The information in this document is provided for informational purposes only. Alectris specifically disclaims all warranties, express or limited, including, but not limited, to the implied warranties of merchantability and fitness for a particular purpose, except as provided for in a separate software license agreement.

3 Table of Contents 1 Executive Summary Overview Solar PV Plant Categories Underperforming Plants Apparently good performing Plants Good performing Plants Continuous Improvement Concept Summary More Information... 13

4 List of Figures Figure 1: The Improvement Curve. Effort required for further improvement of a solar PV Plant Figure 2: The Continuous Improvement Cycle Figure 3: The Continuous Improvement applied on solar PV Plants

5 1 Executive Summary Operation & Maintenance and Asset Management Services are an integral part of a solar PV asset. They are necessary to preserve profitability and Return on Investment of a solar PV Asset; this is the most common understanding. Such services, if properly planed and implemented through a Continuous Improvement concept, can lead to a financial performance increase and optimization. Depending on the actual performance status, such concept may deliver immediate and impressive results in case of clearly underperforming Assets. The concept is very useful in cases of (apparently) good performing solar PV Plants. The difference is that the benefits are evident over a longer period of time and are smaller in scale. Performance increase of just a few percentage points though still deliver a significant financial benefit for the Owners of such Assets. O&M and Asset Management are still today perceived as service expense necessary to preserve the income only and in many cases they are undervalued or overlooked as a revenue enhancer. This occurs because Investors and Banks do not have a good understanding of the potential of a Continuous Improvement concept. Unfortunately this misconception is very prominent also among O&M Contractors. The O&M Contractor is a long term partner of the Owner, or, at least, this is the way it should be. The O&M Contractor is a long term partner of the Owner, or, at least, this is the way it should be. Out of all the parties involved during the life cycle of such an investment, from the initial project concept until the long term operation, the O&M Contractor and Asset Manager is the only party with common interests with Owners. The better a solar PV Asset performs the maximum the benefit for both parties, especially in the framework of bonus agreements when performance exceeds a certain minimum agreed threshold. Before assuming any guarantees by taking over a plant, an O&M Contractor will have to go through a thorough technical due diligence of the Plant. This is absolutely necessary in order to fix any inherent deficiencies of the Plant and restore its ability to perform. These reviews and improvements can

6 occur at any point in the PV plants life cycle, from conceptual design to plants in service for years. In this respect, the O&M Contractor can be a valuable Partner to the bank and the investor with their interest completely aligned with them. 2 Overview In Alectris we generally classify PV Plants in three simple categories, what regards to their performance: Good or adequately performing solar Plants (according to Base Case scenarios) Clearly distressed assets with evident underperformance issues Apparently good operating solar PV Plants While the first two cases do not need explaining, the third case of apparently good operating Plants is related to low quality of information due to unreliable monitoring systems or limited reporting transparency from the O&M Contractor or both. KPIs like Performance Ratio (PR) or Availability (AVA) are very useful as long as the raw data of the calculations is precise and coherent. It is not rare a case though that high PR and AVA values are being calculated, and when a more reliable monitoring system is installed investors find themselves in front of unpleasant surprises. Whereas PR and AVA are KPIs that are meant to measure the performance of an O&M Contractor, banks and investors find it more useful to benchmark their assets with KPIs related to their base case scenarios, like Solar Index, and make comparisons between actual and Base Case values. While this is a useful tool for evaluating the financial performance of an asset, it is less useful for technically evaluating a Plant. In periods with high irradiations actual performance may exceed the Base Case scenario even in a technically underperforming Plant. Similarly during periods with lower than expected irradiations, the Plant may be performing below the expected, but technically speaking, it could be a very well performing plant. A lot is being said about improvement of PV plants, especially in Europe, where due to various reasons, there is a number of plants with non-negligible underperformance issues. While the market focuses on improvement (also the word revamping is used very often) of underperforming plants, we find that apart from this category there is substantial and meaningful room of improvement in the other two categories.

7 Figure 1: The Improvement Curve. It shows the potential room of improvement for all PV Plant categories. 3 Solar PV Plant Categories 3.1 Underperforming Plants Mainly in Europe, a market with a rather long history, there is a significant number of underperforming solar PV Plants (section 1 highlighted in Figure 1). This is mainly due to the following reasons: Plants were constructed under extreme time pressure. EPC Contractors had limited or no experience in solar PV. EPC Contractors who undertook the O&M of the plants in the first years stepped into financial difficulties and neglected their activities and obligations. O&M has been very often perceived purely as a cost burden and the real benefit was not really realized. The benefits of revamping distressed solar PV Plants is off course immediately evident and needs not much explaining. Choosing a knowledgeable and professional O&M Contractor may prove to be a great asset in these cases, where the Contractor acts in the first phases as a technical consultant, by examining the technical details of a PV

8 Plant and after such a process, proposes to the Plant Owner a specific action plan to restore performance levels. In this respect the O&M Contractor s interest is very much aligned to the interest of the Plant Owner and consequently a wise choice on the O&M provider is of great importance. 3.2 Apparently good performing Plants Currently there are a lot of monitoring systems offered in the market, probably several dozens. Investors find it really hard to meet a sound choice for the monitoring system they will use for their assets. Many people focus a lot on an attractive user interface, which is what first impresses possible buyers. Only rarely the technical background in explained and even more rarely do non-technical people have the capacity to understand the technical challenges of such a monitoring system. Choosing a monitoring system that is not technically sound will most probably deliver a lot of imprecise measurements with gaps in the measured data. KPIs calculated on such data will be by definition imprecise as well. In case the deviations are on the positive side the calculated KPIs will appear better than reality and false judgments will be the consequence. The situation may get even worse in case the O&M Contractor does not report in a transparent and detailed manner. This is the category, which we call apparently good performing Plants. Apparently good performing plants (section 2 highlighted in Figure 1) are slightly more complex to troubleshoot. The most common KPIs used provide only rough information about the performance of a plant and have their limitations: Actual output compared to Base Cases are dependent on the precision of the In case the deviations are on the positive side the calculated KPI s will appear better than reality and false judgments will be the consequence. pre-calculated Base Cases and also on actual Irradiation measured (although in many cases this is taken into consideration through the Solar Index KPI)

9 Any Performance Ratio or Availability calculation not based on precise and consistent raw data may show significant deviations from reality In case non-reliable monitoring systems are installed, such issues become evident as soon as a new, better monitoring system is used. The more detailed the monitoring system, the easier it becomes to discover the deficiencies of the previous one and reveal sources of underperformance. With only basic measurements and information it can become a very tedious and time consuming process, if possible at all. 3.3 Good performing Plants Investors and financial entities are naturally satisfied with a good performing asset (section 3 highlighted in Figure 1). Our experience has shown though that there is almost in every situation further room for improvement. Such improvements could be just a few percentage points of performance only, but the way solar PV investments are structured, a 1-2% improvement in performance can mean a lot for the investor. 4 The Continuous Improvement Concept Continuous Improvement is not a new concept. It is very widely used on many other industries, but unfortunately it is not very common in the solar PV sector. It is a structured approach of on-going actions and their verifications and not just a one off intervention (Figure 2: The Continuous Improvement Cycle). To achieve Continuous Improvement the following basic four steps have to be followed: Data and information gathering Statistical evaluation of the above data Drafting of an action plant based on the outcome of the above evaluation Implementation Verification of outcome through data gathering

10 Figure 2: The Continuous Improvement Cycle The first step Data and information gathering is the most essential one. A reliable and detailed monitoring system is the core of this step. The precision and consistency of this data will play a critical role on the decision making further on. In the second step Statistical Evaluation the data is categorized and specific areas that show deficiencies are focused upon. Based on that an Action Plan is drafted and implemented. Usually this is done on a yearly basis. At the end of such period, the gathered data is once more evaluated and further decisions are taken. This is a recurring process. Basically every year the team focuses on the next most important issues based on their impact on performance, while at the same time, due to the aging of the plant, new deficiencies are born. Such process is necessary not only to improve a solar PV Plant to its maximum of capabilities but also to keep it at its maximum ensuring that the asset performs at its maximum throughout its useful life. Obviously, the above methodology requires specific qualities that are important to perform the above activities. These are: Solid engineering background

11 Figure 3: The Continuous Improvement Concept applied on solar PV Plants. Real life, not academic, experience Solid IT systems support Motivation and appropriate company culture The more a solar PV Plant s performance nears the optimum asymptote the more difficult it get to further improve (Figure 3: The Continuous Improvement Concept applied on solar PV Plants.). Such improvements are achieved through the structured approach on the services provided by the O&M Contractor, as explained above. It requires a methodology of gathering detailed information throughout the activities on how incidents and failures impact the performance. A solid IT infrastructure to support such a process is of great importance. In such IT system a knowledgebase where ideas and resolutions to problems of all encountered challenges are stored, significantly enhances the capability to provide answers to complex problems. Such information, together with precise measurements of a monitoring system, if consistently gathered, are subject to extensive statistical evaluation. The outcome of such analysis leads to further improvement of the Plants.

12 A simple example of such approach is explained below: Grid instability is very often a source of various problems. O&M Contractors are usually not liable for such issues. An analysis of incidents caused throughout a year to a solar PV Plant due to grid instability, may lead to a series of technical improvements at the grid connection point that make the Plant less susceptible to grid quality variations. A normal O&M Contractor would stop there. An aboveaverage O&M Contractor would take the step further to improve performance also in situations where contractual liability stops. An above-average O&M Contractor would take the step further to improve performance also in situations where contractual liability stops. 5 Summary Plants can be categorized in three simple categories: Good or adequately performing solar Plants (according to Base Case scenarios) Clearly distressed assets with evident underperformance issues Apparently good operating solar PV Plants A Plant falling under any of the above categories is subject to further performance improvement. While in underperforming, distressed Plants, the improvement will come rather quickly and with relatively low effort, even good performing Plants can be further improved. To achieve such results in all the above cases a structured approach is of great importance. In such an approach precisely measured data from the monitoring system together with information gathered during activities and observations and with the help of a solid IT system (analytical capabilities, knowledge base etc) are of essence. Such approach should be embedded in the DNA of the O&M Contractor and the following qualities are a prerequisite for successful implementation: Solid engineering background

13 Real life, not academic, experience Solid IT systems support Motivation and appropriate company culture Taking the above into consideration, an O&M Contractor could prove to be a profit instead of a cost center, as it usually perceived today. Continuously improving and fine tuning the performance of a solar PV Plant will eventually bring in more revenues that the actual O&M services cost. an O&M Contractor could prove to be a profit instead of a cost center. After all, the O&M Contractor is probably the only party that has a long term relationship with the Owner and the Financial Entities, and their interest is perfectly aligned. 6 More Information For the latest information about our products and services, please visit our website or contact the author v.papaeconomou@alectris.com. If you found this reading useful, please follow us on LinkedIn ( for more up-todate information and similar publications.

14 Copyright 2013 Alectris. All Rights Reserved. Alectris logos, and trademarks or registered trademarks of Alectris or its subsidiaries in the United States and other countries. Other names and brands may be claimed as the property of others. Information regarding third party products is provided solely for educational purposes. v G Doc ID: WP-G02