NOVEMBER 9, 2022
The Importance of In-Depth O&M Planning Early in Solar Project Development
While there’s no doubt solar developers and IPPs consider operations and maintenance requirements as their projects move through the pipeline to design and construction, there’s plenty to suggest that planning isn’t as in-depth or happening as early in the process as it should.
The potential outcome: commissioning fumbles, operational cost overruns, plant underperformance and potential safety issues.
Recently, I led a Borrego webinar featuring a panel of experts working in development, O&M, asset management and independent engineering roles, who shared their experiences and discussed the areas where planning the right O&M strategies early in solar development can help long term profitability. I was joined by panelists Kim Primerano of Estuary Power, Lynsey Tibbs of Silicon Ranch, Mike Howell of EDPR, and Ben Zanetti of DNV.
Based on our discussion, here are some of the areas where in-depth and early O&M planning really pays off:
Understanding the True Cost of O&M Up Front
One recurring theme was the need to understand “the true cost of O&M” in the industry. Frequently, O&M ancillary services like vegetation management and module washing are overlooked in long-term planning and these days they can eat up as much budget as the preventative and corrective maintenance activities. Project developers and owners are gradually becoming better informed about new approaches, but a lot of projects slip through that end up being more expensive to maintain over time. To help improve the information flow, it’s important to remove the inadvertent “silos” that can happen between development, EPC and O&M within organizations.
Lynsey Tibbs of Silicon Ranch described one way her company is overcoming that compartmentalization. Her asset management group presents a weekly list of the top issues affecting plant performance (much of it equipment related) to the engineering and procurement teams. This feedback loop provides critical intelligence based on real-world field data that can help the procurement folks make more informed purchasing decisions for future projects.
Planning for Lifetime OpEx
Ben Zanetti from DNV shared some illuminating charts about life cycle costs and risk reduction, specifically the influence of equipment selection on the long-term OpEx of a solar power plant. When developers choose lower-quality equipment that’s prone to higher failure rates to reduce their upfront CapEx, they’ll face significantly higher O&M and OpEx costs over the lifetime of the project (see chart).
This issue is especially true for developers with “develop/build to own” business models that require more comprehensive O&M due diligence in the design phase. As a renewables O&M veteran who switched to the ownership/development side a few years ago, Kim Primerano explained how Estuary Power recently changed its business model from “develop to sell” to “develop to own.” The shift to long-term thinking — and the necessity of convincing investors they will see consistent returns — has resulted in much more attention being paid to seemingly small details that can impact O&M and plant operation costs over the course of 25 or more years. Examples of these can include more aggressive spare parts management, better rooftop access (plan and budget to rent lifts to safely transport technicians, tools and parts), and new vegetation seed mixes tuned to the local conditions to reduce mowing frequency at ground-mount sites.
Expecting the Unexpected
In our webinar, we heard examples of several common “unexpected issues” that can occur. For example, Mike Howell of EDPR noted examples of overlooked site or system design flaws that can make it challenging for O&M teams to perform their work, such as a distributed generation PV system at a retail store that had been designed with the inverters too close to the building, making them difficult to service.
In another example, Lynsey Tibbs described a PV plant built on wetlands that experiences standing water during the rainy season, making it hazardous for technicians to service the inverters — a clear case of the project planners not factoring in an important O&M requirement. Likewise, all our panelists shared stories of problematic spare parts availability and management, which could be improved by better planning and consideration in the design and engineering phases.
One suggestion for improving the planning process is to pull operations & management folks into the process early to review civil and electrical drawings before they are finalized. For Mike Howell, their teams work from a “living design specification document” which is updated regularly and incorporates change orders and O&M repricing while the EPC is still on site. In this way, issues involving differences between engineering drawings and the as-built plants can be mitigated.
Commissioning surprises are a common occurrence on most solar power projects, and O&M often has to quickly deal with equipment glitches and other work orders soon after the EPC team hands over the keys. To avoid surprises and costly interruptions in operation, transparency is critical, right out of the gate. The asset owner or EPC should inform the O&M team on Day 1 if there are any known issues that will require work; likewise, if those details aren’t provided, O&M and asset management should not be afraid to ask.
IRA Impact on Early Planning
The passing of the recent Inflation Reduction Act, namely the production tax credit provisions, is also expected to have an impact on the financial planning aspects of the solar development process. To receive those credits, stakeholders will need to calculate availability, plant performance, and other items over the lifetime of the project, making it even more critical to have these O&M-related conversations and plans in place as early as possible in the development stages.
There’s plenty more to learn from our lively discussion, so I encourage you to watch the webinar on demand.
And if you would like to talk to someone from Borrego’s experienced O&M team, please contact us here.