Investing in solar is unlike investing in traditional thermal generation. For starters, the CAPEX is front-loaded, and the immediate returns are less impressive than natural gas, for example. However, longer term investments in solar show impressive internal rates of return (IRR) and cost reductions, despite the high inflation rates that have characterised European economies in the past couple of years.
Part of the key to this has been continual cost reductions in key components, primarily PV panels. However, improved reliability and efficiency of solar power plants, driven by the increased professionalisation of EPC, O&M, and Asset Management services contribute to this. Whilst prices for components and “full wrap” O&M services are tracked and documented by companies like BloombergNEF, there is little focus on how decisions made during the project design phase can impact OPEX costs further down the line.
For example, a batch of damaged modules can be caught early and returned with proper testing. However, if this is not completed, then asset owners run the risk of having to replace them five-ten years later after efficiency and output nosedives. Adding insult to injury, not only do asset owners have to pay for replacement modules, but they have been losing out on yield over a longer period.
Following this logic, it quickly becomes apparent that an Independent System Operators (ISO) certificate does not necessarily indicate how equipment will perform across its entire lifecycle, whether it was damaged during transportation, or whether the certification applies to a production line instead of the component itself.
The truth is that quality is not something that can be plugged in once other decisions on price and management have been taken. Instead, to ensure the best results, quality assurance and quality considerations must be infused into the planning of a project and throughout its entire lifecycle.
Everyone will have their preferences but ensuring that the experience and expertise of all actors (asset owner, debt and equity investors, lawyers, technical advisors, asset managers and EPC and O&M service providers) is leveraged to establish baseline quality standards and a robust strategy, is as good a guarantee of revenue as one is likely to find.
Quality assurance is at the centre of SolarPower Europe’s and Solar Promotion’s Solar Quality Summit Europe, taking place on 23-24 January, Barcelona. This industry event will bring participants, the latest market intelligence, industry-approved best practice for technical quality assurance and Environmental, Social and Governance (ESG), and leading advice on the financial optimisation of solar assets.