Solar O&M Shortcuts Lead to Higher Costs Later, Experts Say

Prices for utility-scale solar operations and maintenance
contracts havedropped across the globe in recent years, driven by
competitive auctions and fewer services being provided. But prices
at the bottom, think $3 to $5 per kilowatt per year, are not
without their drawbacks, experts say.

Cutting corners on the full “scope of service†contract,
which includes site maintenance like vegetation management and
equipment checks, often means greater overall costs during a
project’s lifetime, according to new research published
by kWh Analytics and conducted separately by Wood Mackenzie and
Origis Services, a unit of solar developer Origis Energy that
provides O&M for internal projects and other owners.

“This trend of squeezing O&M pricing is coming at the
expense of the owner and the expense of the long-term project,â€
said Josh Corbitt, Origis Services’ director of business
development for O&M and asset management. “Those costs are
going somewhere, and they’re being shifted down the road — more
often than not at a higher price for the customer.â€

Analyzing hours spent on corrective work for a 2-gigawatt
portfolio and how much that work cost, Origis found that asset
owners can end up paying nearly 30 percent more than planned if
their original contract leaves out “corrective maintenance,â€
which includes repairing and replacing faulty equipment like
inverters and modules.

“Inverters are constantly going down and going offline,â€
said Corbitt. “Somebody has to be there onsite to
troubleshoot.â€

Origis prefers including corrective maintenance in contracts it
fills and those for its own projects, said Corbitt. With corrective
maintenance included in the contract, Origis Services is better
able to staff its sites to make sure the needed technicians are
available when issues do crop up. For its own projects, the company
has identified a “sweet spot†that includes 70 percent of
estimated corrective maintenance in a contract’s annual service
fee.

As an O&M provider, Origis has a vested interest in
increasing the price of those contracts. But the company’s
results align with independent analysis from Wood Mackenzie. The
lower cost of contemporary O&M contracts is often
“erroneous,†said the consultancy in a paper published
Wednesday, because those contracts often drop necessary maintenance
work in favor of cheaper top-line figures.  

“Prices might not include some important parts of operation
and maintenance just because they want to reflect the lowest figure
possible,†said Leila Garcia da Fonseca, a principal analyst at
WoodMac.

Vegetation management, corrective maintenance and module
cleaning can make up 40 to 45 percent of a project’s total
O&M costs, according to WoodMac. Lower-priced O&M contracts
often exclude those services, even though they’re essential to a
solar plant’s functioning.

Garcia da Fonseca agreed that including those functions in the
“scope of service†contract is likely to be cheaper over time.
An all-in contract also may come with a warranty that the servicer
will guarantee a project’s functioning at a certain level, while
a la carte options usually do not.  

“It makes sense for asset owners just to go with a full wrap
[contract],†said Garcia da Fonseca. “In the long-term …
they’re going to incur less expenses than doing ad hoc.â€

Source: FS – GreenTech Media
Solar O&M Shortcuts Lead to Higher Costs Later,
Experts Say