RISK MITIGATION AND BEST PRACTICES FOR FINANCING A SOLAR PV …kongrespv.pl/storage/prezentacje/UL Poland Workshop 02 Risk Mitig… · wind & solar projects* *since 2012 200,000+

RISK MITIGATION AND BEST PRACTICES FOR

FINANCING A SOLAR PV PROJECT

BY: DANIEL BARANDALLA, SENIOR PM, DD SERVICES

Warsaw, 16 October 2019

UL and the UL logo are trademarks of UL LLC © 2018. Proprietary & Confidential. 1

2

100+Country locations of

UL renewable energy

customers

500+ UL Renewable

Energy Experts

Independent / Owner’s

Engineer on

450+ wind & solar projects*

*since 2012

200,000+ MWTotal renewable energy megawatts (MW) assessed

55+

ADVISED

90%of the wind and solar

industry’s top PROJECT

DEVELOPERS and

PLANT OWNERS

FORECAST PROVIDER for

72+ GWof installed renewable energy projects

Years of combined experience

in the renewable energy

industry


1

International Presence500+Renewable

Energy

Experts

44 Countries with

UL offices

159 UL sites

(offices, labs)

WIND SOLAR

UL DRIVES TRUST IN RENEWABLES

E-MOBILITYENERGY STORAGE


Project

Development

Support

Asset

ManagementGrid

SolutionsDue Diligence

& Bankability

Testing &

InspectionCertification

Cybersecurity

Software &

DataEnergy

Storage

Solutions

Research &

Advanced

Studies

GLOBAL CONTEXT SOLAR PV


• Europe installed 11.3GW in 2018 (21% increase compared to 2017)

Last year, 22 of the 28 EU markets showed higher installation numbers than

the year before.

• Sustainable FIT free growth

• First Projects without subsidies are already connected to the Grid in EU

countries

DISTRIBUTION OF RISK ACROSS PROJECT

LIFETIME


Stakeholder Risk

Developer/Owner/

Operator

• Meeting investor expectation

• Rising operating costs

Investor/Lenders• Inaccurate risk assessment

• Declining Cash Flow

EPC/Contractors

• Rising costs

• Project delays

• Quality of work

Insurer• Performance uncertainty

• Equipment failures and lost production

Manufacturer • Warranty

• Accurate and bankable energy

estimates

• Technology roadmap and best

practices

• Independent design verification

• Minimum contractual

requirements

• Cost projectionsUL and the UL logo are trademarks of UL LLC © 2019. Proprietary &

Confidential. 8

ON-SITE MONITORING EQUIPMENT

Typical Monitoring equipment

• Two secondary-standard pyranometers

(Kipp & Zonen, Hukseflux)

• Supporting met measurements (temp,

wind speed, etc.)

• Reference cells for soiling

• Albedometers for bifacial applications

• Heating and ventilation in cold climates

System providers

• Campbell Scientific

• NRG Systems (2016)

9

WHEN TO USE ON-SITE MONITORING

Recommended when

1. Minimal regional data is available or depending on Project size

2. Satellite models tend to have higher uncertainty (dynamic weather variability, snow

cover, areas with microclimates due to topography)

3. Low resource locations (financial margins are narrower)

4. Local off-taker requirements

5. Larger projects (50-500 MW) when financers may be more conservative with larger

investment capital.

10

MODELED SOLAR DATA

Modeled Solar Data

• Bankable from high-quality data providers

• Regional and seasonal biases still exist

Resource Uncertainty

• Uncertainty should include validation reference

uncertainty

• Monte Carlo sampling approach under predicts

inter-annual variability

• CPR TGYs are raw (scaling and rebalancing

needed)

11

VALUE OF ON-SITE MEASUREMENTS

12

ENERGY MODELING

APPROACHES


ENERGY PRODUCTION ESTIMATES

Energy Modeling Approach

• Loss factors inputs

calibrated to plant design

and site-specific conditions.

• PVSYST used for

simulation.

• Results post-processed to

address operational and

long term loss factors.

14

ENERGY MODELING TOOLS

PVSYST

• Recognized market leader. Most common software and accepted by all banks.

• More accurate calculations due to the large amount of algorithms for each

timestep.

• Responsive technical support.

Alternate Modeling Tools

• Utility-Scale: SAM, PlantPredict, PVSol, SolarFarmer

• Residential and C&I models in web-based platforms


DETAILED PROJECT DESIGN INTEGRATION

• Determination of exclusions

and developable area

• Project-specific optimization

and configuration details (DC-

AC ratio, pitch, tilt, etc.)

• Modelling of PV array and

inverter locations

• Detailed configuration and

layout drawings

16

STANDARD LOSS ASSUMPTIONS:

EFFECTIVE IRRADIATION

Effective irradiation losses are associated with sunlight reaching and entering the DC collector

area (i.e., the modules).

Horizon Shading

Near Shading

Incident Angle Modifier Factor (Reflection)

Environmental Loss (Soiling and Snow)

17


PHOTOVOLTAIC CONVERSION

Photovoltaic conversion losses are associated with the PV modules’ performance, actual power

capability, and ability to convert sunlight into DC electricity.

Initial Light Induced Degradation (ILID)

Non-STC Operation (Irradiance Level and Temp)

Module Quality

Module Mismatch

18


OPERATIONAL

Operational losses are associated with the overall system’s performance, availability, consumption,

operational strategy, and operational limitations.

Tracking System Performance

DC System Performance (Module/String Failures)

Availability of System

• Availability of AC System (Inverters and

Medium-Voltage Transformers)

• Availability of Collection, High-Voltage

Transformer, and Substation

• Availability of Utility Grid

PPA Curtailment , HVAC & Auxiliary Consumption

19

SOILING AND SNOW LOSSES

Model predicts soiling and snow loss, accounting for:

• Soil accumulation, rain event power reclamation

• Cleaning events and schedule optimization

• Snow totals at different temperatures

• Snow melting and sliding

• Model relies on TMY to predict precipitation days

20


ANNUAL PERFORMANCE DEGRADATIONAnnual performance degradation estimates the impact of material and system degradation on

future-year energy production.

Material Degradation

System Degradation

• Inverter and Curtailment Loss Reclamation

• DC System Performance Loss Increase

• Mismatch Loss Increase

(Calculation Approach)

21

Technology Roadmap


PV TECHNOLOGY ROADMAP


• Crystalline Silicon

Technologies keep

dominating the Global

Market.

• Mono and poly accounted

95% of the capacity in

2017 (roughly 65% of the

installed capacity was poly

crystalline)

• Thin film represented a

5% of the technology

market share in 2017

BIFACIAL TECHNOLOGY


• Bifacial product are mostly based on mono

PERC technologies.

• Passivated Emitter Rear Contact (PERC)

solar cell technology brings 0.5-1% higher

efficiency with little more cost for additional

production equipment.

• Manufacturing from conventional mono to

mono PERC is relatively easy and sets the

base for future bifacial technology

development.

• It is expected that 60% of crystalline silicone

modules will be bifacial by 2029.

BIFACIAL VS MONOFACIAL TECHNOLOGY


• Conventional crystalline monofacial setup vs bifacial module setup

• Typical module layup for bifacial are based on a glass-glass structure with/without frame.

• Some suppliers are already commercializing glass-transparent tedlar modules (less

weight/easier to install)

TECHNOLOGY TRENDS


The trend at the moment is to use half cells,

to increase module power.

By cutting a fully processed cell into two

parts, resistance losses can be reduced,

providing a power boost of about 5 to 6 W on

the module level.

Modules have better behaviour against

shading effects.

Resistance losses of solar cells are also

reduced by adding busbars. The standard at

the moment is to use 5-BB design or multi

bus bars (MBB).

Module efficiencies range 17 – 19 %Mono PERC half cut cells Mono PERC standard cells

TECHNOLOGY TRENDS


Mono PERC products are providing

already:

• Higher product warranties;

• Better degradation warranties

(0.45 – 0.50% annual degradation

rates)

• Longer degradation warranty

terms (30 year period).

Design Verification


CIVIL REVIEW RISKS AND RECOMMENDATIONS


Associate Risk Mitigation and Recommendations

Incomplete Geotechnical

Investigation for Foundation

Installation

Evaluate the subsurface conditions at the proposed module locations to determine soil

engineering parameters and to develop geotechnical design requirements.

Soil characterization tests, pull out/driven test, and chemical tests.

Seismic refraction surveys, geophysical measurements, and standard penetration tests

The ultimate goal of a solar-specific geotechnical analysis is to use site research, soil

investigation and empirical load-test data to optimize the foundation for the specific site.

Bad Structural Calculations.

Structural Design Not

Performed for a Specific

Location

Proper design loads verification, considering local wind data and the loads transmitted from

the mounting system own weight. In most cases the design of a solar structure will be

governed by local wind specifications and loading.

Proper construction recommendations for areas where weak soils were identified. Also

proper treatments for frost effects like thawing cycles, snow presence, etc.

Bad Foundation Installation

Procedures

Some foundation types and geometries better suit specific soil or site conditions than

others. On smaller projects, it often makes sense to design around a single foundation type

to simplify project logistics. However, an optimized design for larger sites often eschews a

one-size-fits-all approach in favor of multiple pile profiles, embedment depths or even

foundation types.

FIELD EXAMPLES


Limited erosion control Remediation

STRUCTURAL DESIGN CONSIDERATIONS: WIND

• ASCE-7: Minimum Design Loads and Associated Criteria for Buildings and Other Structures

• Use modules that are designed for maximum design wind loading, including extreme events such

as hurricanes

• Design structures for higher wind loading

• Deeper pilings around edges of array field

• Module connection points


STRUCTURAL CONSIDERATIONS: COLD WEATHER

Snow loads

• Withstand weight of snow and ice

• Shorter spans, larger beams, more

support

Frost Mitigation

• Pilings deep enough with enough

mass to resist uplift from frost

• Good drainage around piers to prevent water

accumulation

• Special coatings on piers to minimize frost uplift


STRUCTURAL CONSIDERATIONS: FOOTING

Loose Soils

• Compaction

• Mass (concrete)

• Longer piers to pass through loose soils

• Ballasted systems

Seismic loads

Hail etc.


ASPECTS OF ELECTRICAL SYSTEM DESIGN

General Design

• 30+ year design life

• Good wire management

• Minimize line losses (AC and DC)

• Robust components

• Overdesign for conditions

• Design in accessibility to major components


Contractual Requirements


EPC BEST PRACTICES (1)

• Experience is everything

• Challenges with the “oversight and subcontract model”

• Short timelines

• Capability oversight

• Align Schedule across all contract requirements (very few “Full Wrap” contracts)

• Interconnection requirements

• PPA cliff dates

• Supply agreements

• O&M scope

• Regular Construction Monitoring

• Ensure all construction is inline with warranty requirements


EPC BEST PRACTICES (2)

• Clear testing protocols

• Commissioning testing to confirm proper operation

• Performance test to validate committed energy production

• Overlap period defined between EPC and O&M provider

• Project benefits when EPC is the O&M for at least 2-3 years

• Warranties

• 1-5 years in workmanship

• Performance guarantees and LDs are key to identify and implement claims

• Challenges in defining fault (equipment, installation, design, etc.)


O&M SCOPE OF WORK


• Comparisons are challenging

as scope buckets vary widely

• Scheduled/PM

• 2-4 visits per year

• Lower level labor

• Unscheduled/CM

• All about response time

and qualified labor

* Source: Green Tech Media Research

O&M/AM BEST PRACTICES (1)

• Experience is everything

• Clearly defined scope of work across all contracts

• Adequate visual inspection protocol for PM visits

• Response time guarantees for downtime events

• Monitoring and data analysis

• A strong Asset Management team can offset a weaker O&M team

• Monitoring system for advanced fault detections and issue isolation

• Performance calculation equation and assumptions

• Correcting for actual environmental conditions (irradiance, soiling,

snow, temperature)


O&M/AM BEST PRACTICES (2)

• Cost savings of using same development team for O&M and AM are often

offset by

• conflict of interest around plant performance issues

• increased vendor bankability risk

• Intelligent cleaning of modules (snow and dirt)

• Alignment between AM and O&M teams on spare part management

• Warranties

• Availability and performance guarantees are crucial to optimal yield

• Very limited beyond contract term


INVERTER RESERVES

Inverter costs are treated differently in financial models as they are a large

capex and are highly variable.

Price * Percent replaced * # of replacements

Price:

• String is market price

~$0.07 to $0.10/W

• Central excludes

skids/pads etc.

~$0.06/W to $0.08/W

Percent replaced

• 60% of the core central

inverter is expected to

need replacement

• String inverters are

plug & play so 100% of

price


# of replacements

• Central Inverters have

5 year warranty + 10

year life (2X)

• String inverters have

10 year warranty + 15

year life (1-2X

depending on model

length)

COMMON OPERATING ISSUES

• Modules

• Breaking (improper installation, hail, edge

cracks)

• Delamination/yellowing

• Hot Spots

• Snail trails

• Inverter

• Overheating (mfg defects or design flaws)

• Control systems not working

• Misc. Trips offline

• Trackers

• Structural failures

• Improper Stow

• Poor tracking alignment

• Shading

• Row to row (design issue)

• Poor vegetation management (in

field and off field)

• Soiling

• Infrequent washing/underestimation

of dust

• Snow fall buildup and residue

during fall-off

• Change in AR coatings over time


THANK YOU!

[email protected]


mailto:[email protected]

Documents

RISK MITIGATION AND BEST PRACTICES FOR FINANCING A SOLAR PV …kongrespv.pl/storage/prezentacje/UL Poland Workshop 02 Risk Mitig… · wind & solar projects* *since 2012 200,000+