“Solar is maintenance free”. “Solar panels last for over 20-years”. “The inverter warranty will take care of everything”. “Don’t worry”.
You might have heard these things before. You might have believed some of them and maybe for a period of time, it was partially true.
What has changed?
We have good historical data now. We have had equipment failures, both on the panel side and the inverter side. We have seen soiling. We have seen microcracks in cells. Infrared cameras provide context and evidence beyond what our assumptions were.
Circuit boards in utility scale inverters can fail with one insect crawling across a component, turning off the system immediately. A loose connection at a combiner box could cause a fuse to fail prematurely and create nuisance tripping of other components. Residential inverters, whether they are micro-inverters or string inverters have their share of failures as well.
Knowing these events will surely come up within the first 10-years and most definitely in the next 10-years plus, what can we do about it?
Often overlooked in your selling price for your system, is a slush fund for O&M. There was a time when the industry laid this responsibility upon the manufacturers of the products. Some are still around today, some have left the world stage.
As the industry matured, you could get a micro-inverter manufacturer to send you replacement units. But what became evident was they weren’t going to compensate you for every truck roll.
For some companies this exposed a liability into their business models. Being in the EPC business requires you to have money set aside for these incidents. It also needs to be spelled out clearly in your contracts, what is included and not included in your O&M agreements.
The companies that offer PPA’s or leases, they wrap these O&M agreements into their offerings. You might believe they’re shielded from the liabilities. But if they have a fleet of systems out in the wild, they will need a dedicated O&M team to provide this valuable service. This is to keep investors of these systems satisfied that they’re receiving the revenues originally projected in the proformas.
What will it take for you to recalibrate your price structure to have that peace of mind for your clients and your company to ensure you’ve anticipated equipment failures?
For starters, look at equipment manufacturers and know what is covered and what isn’t covered when things go wrong. Who will pick up what costs? What is really included? What is left out or omitted? Then start to think about your clients. What are their expectations? What is a reasonable amount of downtime of the whole system or a part of the system? Is it better to have in your agreement an uptime and downtime guarantee?
How about an annual true-up of kWh’s created from an original baseline from the contract and account for variations and fluctuations in production and account for O&M?
O&M can be good for you and your goals. It can provide a steady stream of income for you and keep you busy during the lean times. It can also be a source of lead generation and gives you the ability to offer other ancillary services today and into the future.
In 5-years will 85% of systems have storage? Probably. Will your clients also have electric vehicle recharging stations at home and their businesses? Most likely.
The 3 things you need to consider when determining how long these systems will last depend upon this:
- A proactive approach to preventative maintenance
- A schedule and supporting analytics to anticipate when to go to the site
- A team of trained individuals to spot problems before they occur and know how to respond and plan for them versus being in a reactionary mode
The more years that we see in the rearview mirror, means more systems getting older. This is a great opportunity for you to provide these valuable services to clients, before these orphaned systems stop working due to neglect that can often be avoided.
And the more your competitors look at this as an asset and not a liability, then this will raise the bar in the industry that often is overly focused on the least expensive cost per watt installed today versus the true cost over the life of the system.
If you want to get some insights into the development process and O&M strategies, come spend time with Chris Lord and I in our Solar Executive MBA Training course that starts on Monday.