This article will provide a snapshot of the current technical challenges that engineers and project managers face with the technical qualification of solar projects.
Project qualification is a critical part of the commercial solar sales process. It’s where sales, technical skills, and finance all overlap. From the investor due diligence perspective, there are a number of key technical elements that need to be gathered during the qualification process with implications for selling the project to investors. If you’d like to review some of those materials, check out the following two articles:
- Step-by-Step Guide to Selling your Commercial Solar Projects to Investors
- How Wall Street Capital is Standardizing Commercial Solar Due Diligence
The first week of our 10-week Megawatt Design course is focused on project qualification. Instructor Ryan Mayfield, PV Technical Editor for SolarPro, asks students two questions about qualifying projects. I wanted to share these answers because they provide excellent insights into the current state of the market and the challenges across a whole number of industries.
1. What are some of the most common obstacles you face when qualifying projects?
2. Has your team been able to standardize any of the aspects discussed to help minimize up-front engineering?
Summary of Answers
Question 1: What are some of the most common obstacles you face when qualifying projects?
- The biggest challenge that I run into regarding qualifying projects are the fully ballasted systems in Florida. The owner of a building wants a fully ballasted 10 kW system, but I found out from the building structural engineer that the roof was not designed to accommodate a ballasted PV system. The owner also does not want his roof penetrated. Essentially, this may end up being a deal killer.
- As an engineer, one of the biggest problems I run into is the age and the capacity of the existing electrical infrastructure. Another issue comes up during roof installs, while trying to assess the support configuration of the roof. Often times, I have to consult my company’s structural engineer to see if a particular roof has the integrity and strength to support a PV system.
- I’d say the two most common items are: financing and structure issues. Getting the clients to wrap their heads around the investment is often the hardest part. Getting them to think in terms of $/w or $/kWh rather than the cost upfront. The second issue is structural. We have a really hard time getting the information needed ahead of time to qualify the structural compatibility of the roof. Generally, we generate a quote with a disclaimer that we assume the structure is sufficient for the proposed system, and that we will include a structural evaluation as a part of the project. Our contract has language that allows us to invoice for any project cost incurred if we find the structure is not sufficient for the array, and they do not want to move forward (either with a different design, or with any required structural reinforcements, with the required change order). We then perform the structural evaluation as early in the process as possible to prevent any extra costs for the client in the event of unfortunate news.
- I will outline three obstacles: 1. Financial: While developing MW scale grid tie systems on behalf of investment groups, we are requested to produce increased return on investment index under low FIT regimes, while quality specifications remain high. 2. Engineering: In relation to financial requirements we need to produce very detailed business plans very early in the decision phase in order to proceed for renting land and continue with licensing. This requires to make an overall assessment of the project in terms of environmental impact, soil formations, land inclinations, shading analysis for several locations and go through various designs in limited time. 3. Structural: We usually find rocky ground formations in the area of development… we’re then required to concrete the mounting structures. This causes time delays and results in increased cost.
- The biggest obstacles that I have seen in the 10 years I’ve been installing PV, aside from financial concerns, is the structural considerations and the power company. Structurally, until we get an engineer out to the site to perform a thorough evaluation, the entire job is in limbo. Usually, all the equipment and final designs are pending until we know exactly what the roof can handle and where the problem areas are. Sometimes the roof needs to be replaced, or a new layer must be put on. 2. The power companies, for the most part, are easy to deal with. Still, we have run into areas that have existing arrays, and the power company expresses concern about the grid handling increased backfeed or demand, based on the production. We have had costs that ranged up to $250k+, which would kill the deal.
- Some obstacles that our company (operated in Mexico) face when qualifying projects are: 1. Poor data on where the system could be installed. Most of the time it has to be assumed that optimum conditions are met for the required system size. We don’t want to spend much time in site before giving an economical /financial proposal of the project to the customer. 2. Customers have a short ROI expectation of roughly 5 to 7 years without any government aid. Which represents a challenge to design cost effective PV solutions to our customers. 3. It is also hard to make an educated guess about the roof’s conditions to support a PV System.
- When I qualify projects, grid interconnection costs are challenging to estimate. This is because it is out of my hands. The process of involving the utility is often lengthy, and our tight timelines with the incentive program/customer, often do not allow for time lags. We often end up blindly ball parking the cost of grid upgrades, which can be way off. Customers do not often know what their cost of grid interconnection/upgrades will be until way down the road. This is mostly due to the utility being very slow. I submitted an interconnection application back in November/December 2014, and I just got a response, yesterday, requesting more information. It’s now March. Luckily, most of our customers are willing to commit to projects with the caveat of limits on interconnection costs.
- Generally by the time the projects come to me, they have been qualified to a degree. The three obstacles that I see are landlord/tenant issues, structural and roof condition. The landlord/tenant issues are out of our control (they are with the developers), so there isn’t much we can do besides help ease concerns. Structurally, we go through the right motions. We try to get our test cut done as early as possible so we are not burning any design cycles before we are more confident on the structural matters. With the test cut, we are completing a roof condition evaluation which will help us decide if the roof needs replacing and if that is even possible with the owner’s budget.
- Some obstacles we face when qualifying projects are financial: Here in Chile, there are no incentives, so PV projects have to stand on their own financial merits. There is a feed-in regulation for systems under 100 kW, but unfortunately the utilities lobbied for a feed-in price that is half the value of the grid distribution price. On the other hand, power prices are fairly high and solar irradiation levels are very good, so large scale PV projects are being done, particularly in the north of Chile. Also, since most PV systems that we install are groundmounts, I haven’t seen any larger scale roofmounts yet. We also experience difficulties with grid connection, as the local utilities have been very hesitant and slow to accept PV systems. Cooperation by the utilities and finding a site with the appropiate connection capacity is a key factor. Another obstacle: roofmounts. I think there is plenty of rooftop real estate available in Santiago, but I have a feeling that the availability of structural drawings on older buildings will be quite low. Maybe, it’s more beneficial to pursue PV projects for new build situations. Although that may limit the number of opportunities, being able to start with a clean slate could have some advantages, as the building design could already take a PV roofmount system into account.
- This past year most of our projects are utility size ground arrays. The first obstacle is the real estate: zoning, codes and of course site surveying and orientations, then soil sampling and column sizing. One of the biggest challenges is product delivery and acquisition. We have also been on the ground floor of bidding by helping the customer with writing the request for proposals. This gives us the chance to spec our equipment and help to eliminate the competition.
- The most common obstacle we face with larger commercial projects is the structural analysis. We work with outside structural engineers on our projects, and the process of completing the structural analysis can be quite time consuming and costs can vary significantly from project to project. As we provide bids for projects we like to spend only as much time as necessary gathering information needed for an initial review so that we can get an estimate of the cost of the structural analysis. We then write into the estimate an engineering allowance and indicate that the total installed cost will be finalized based on the results of the engineering review and will include any added structural upgrades that may be necessary. This process has worked well for us so far.
- As owner’s agents, when we work with communities procuring solar the due diligence bar is lower, as the question we ask is whether it’s worth putting the time in to seek proposals and select a vendor. For developers/investors the stakes are much higher, of course. With that said, the most vexing issue is structural. Even in cases where the PV adds limited additional load to the roof, it may trigger a requirement to upgrade the roof to the current building code, which makes it cost prohibitive. Also, I’ve seen significant disagreement in structural engineer’s findings. One says “yes” PV can be added, and another says “no.” This does not seem to be a black and white issue. We’ve lost some sites that otherwise looked promising.
- Interconnection, interconnection, interconnection. In my experience, this is always the great unknown when it comes to large distributed generation (DG) projects. There are various levels of development a project has undergone when it reaches my desk, but understanding the options for interconnection is always the first conversation I have with the sales person or developer, and it is often the least understood part of the qualifying process. Interconnection is a large cost driver for a project, especially when it comes to open field MW systems. Where is the closest point of service? Where are the closest 3-phase utility lines? Where is the substation? Are we at the end of a feeder? Is there already PV on this feeder? Can this feeder handle the amount of proposed PV? We have begun to stress the importance of understanding interconnection to our project developers to reduce the amount of investigation require by engineering. If site A requires a dedicated feeder from the substation and site B is adjacent to utility 3-phase lines, we want the developers to understand which site to pursue and how the economics of a project may be impacted.
- I come at this from the prospective of a developer. I want to have a thorough list of potential deal killing problems and to make sure all of these items look reasonably easy to traverse. I also want to have a working relationship with business associates that are willing to answer some preliminary questions before going on the clock. For example: having a structural engineer that I can send prints and photos to that is willing to say “this could be an expensive roof to make modifications to” or “that roof looks like it shouldn’t be a problem.” This helps qualify a project without a lot of upfront engineering costs. It also helps generate potential work for the engineering firm and provides value to the client.
- In general, a lack of information (in regards to the electrical infrastructure, roof framing construction & roof map highlighting roof obstructions such as piping, vents and RTU’s and their weights) is a huge obstacle. Several recent project hurdles have included: coordinating with utilities in identifying the “service delivery point” and use of the utility pull section in the main switch gear for virtually metered systems.
- Interconnection, in the same way as the others have said, can be quite difficult. Obstacles I’ve seen in interconnection have been evaluating the losses on long lines between the PV array location and the interconnection to the load. With distances significant enough (approx 1 mile), it becomes necessary to evaluate the cost of interconnection using low voltage transmission vs. stepping up the voltage over the distance and then stepping back down at the load for the client. Keeping upfront engineering costs down was accomplished by keeping parallel models with both transmission approaches and running load flow analysis on each as PV generation data and load profile data was received.
- The structural assessment of the building/roof is usually the biggest stumbling block for roof top systems. In an RFP situation, with little or no as-built/record drawings available, we usually just base our bid on the assumption that the the building will need little or no structural work. The assumptions that we have based our system cost off of are stated in our RFP response. In a non-RFP situation, we usually prepare an initial estimate for the building owner, and then if they agree to move forward, we will either get them to pay for the structural analysis up front, if one isn’t available, or we have something written into our contract as was suggested in the lesson which allows us to back out and recoup engineering costs. Of course, this isn’t always the case and sometimes you have to decide if the chance of eating the costs are worth the opportunity to do the job. I would say that some of the biggest obstacles in qualifying ground mounts can be difficulty getting easement information, lack of geotechnical/soils information and lack of topo information.
Question 2: Has your team been able to standardize any of the aspects discussed to help minimize up front engineering?
- Yes– via a site discovery checklist. This is to make sure we cover all that we can cover when completing the site visit. There are processes in place as well to pre-assess the customer site using satellite imagery and street imagery before going to the actual site. This reduces the guess work and also brings up issues that we may want to address when we first arrive at the site.
- We have created some procedures in order to reduce up front engineering for prior site visit analysis and site visit analysis. Pre site visit basically includes work on digital elevation maps, environmental data bases, topo/land cover databases and preliminary design simulation. On site, we go through a check list examining horizon and obstacles for shading analysis and other localities which might need attention. The toughest part is going through the final stage designs for several design strategies and budgeting each solution in order to find the most cost efficient among other criteria. There is no standardized procedure for this, so it is the most time consuming. It would be positive change to project procurement if there was a standardized procedure to help locating optimum design solution faster.
- We do not have a way to reduce our up front structural engineering cost aside from actual structural drawings, if available. But on the electrical side, I have been able to personally mitigate a lot of costs. With 9 years of actual installation experience, from mounting the racking all the way to megawatt sized interconnections, I handle the initial design work, and pass it off to the engineers only for certification. I work with the sales staff, product manufacturers, installation crews, and the engineers to make sure that we have everything on point. We’ve actually saved money by catching engineering mistakes or finding a more cost effective solutions or equipment. The initial design is done using Google Earth measurements and PVSYST estimated productions and compare it to what the customers uses, can safely fit in the given area, and can afford. During the initial sales visit we get key items, like the switchgear information and transformer sizes, potential electrical routing, major obstructions, and hopefully, building drawings.
- In regards to minimizing up front engineering, we have adopted ground mounts and single pole mount designs for many of the projects we commission in this area. The ROI for roof mount designs often does not pencil out due to snow concerns. Potential customers are often not in a position to remove snow from roof mounted arrays on a frequency that will warrant going on the roof. We have found it much easier to sell and maintain systems that can be maintained from the ground and/or are designed to shed on their own.
What are some of the most common obstacles you face when qualifying projects?
About Ryan Mayfield, expert instructor of Megawatt Design and President of Renewable Energy Associates
Ryan Mayfield has been working in the renewable energy field since 1999 and is the President of Renewable Energy Associates, a consulting firm providing design, support and educational services for electrical contractors, architectural and engineering firms, manufacturers and government agencies. Ryan serves as Photovoltaic Systems Technical Editor for SolarPro Magazine, regularly writing feature articles in SolarPro and Home Power magazines, and wrote PV Design and Installation for Dummies. Ryan was also a contributor and video team member for Mike Holt’s Understanding the NEC Requirements for Solar Photovoltaic Systems. Ryan teaches various PV courses across the nation for electricians, existing solar professionals, code officials, inspectors and individuals looking to join the solar industry. Class topics include National Electrical Code and PV systems, residential and commercial PV systems. Ryan holds a Limited Renewable Energy Technician (LRT) license in Oregon, is an Oregon Solar Energy Industries Association (OSEIA) board member and chairs the state’s LRT apprenticeship committee.
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