Article: Managing a Portfolio with Aging and New Assets

(abstract from Simone Mandica’s speech at Solar Asset Management Europe)

Following the recent wave of construction of PV plants, asset managers face the difficult job of overseeing portfolios encompassing both recently built assets and assets that have been in operation for longer than six years, and therefore having completely different needs.

For the new builds, the focus is on identifying deviations from the technical specifications and quality requirements in the EPC contract and on having them promptly remedied by the contractor.

On the other hand, for older assets, the focus is on implementing strategies that guarantee a high level of production or even improve the plants’ yield, at a time when (due to the aging of the equipment), a deterioration in performance is expected.

Additionally, older assets may be affected by long-standing equipment issues,when the EPC contractor is no longer accountable for the equipment,  or because it is not possible to rely on the product warranty (either because the kit is out of warranty or because its original manufacturer is not operating in the market anymore).

Therefore, a fine balance must be struck between making the right decision on a project-by-project basis and, at the same time, trying to maintain a uniform approach to managing the portfolio.

Technology hardware solutions
Hardware technical solutions are the key to improving  the performance of plants that have been in operation for six years or longer. There are two aspects to be considered:

  1. Maintenance or incremental performance improvement for assets operating in line with expectations
  2. Bringing underperforming assets to or above the expected production level.

Both aspects demand a very good understanding of the historical operational performance of the plant and of the technical features of the key equipment, so that ad hoc solutions can be determined and multiple scenarios can be tested through feasibility studies.

For assets performing in line with expectations (1), possible approaches are: 

  1. Retrofit of an anti-reflective coating – the glass of old modules is not equipped with an anti-reflective coating, but such a coating is very effective in increasing the absorption of sunlight and therefore enhancing the module production by 2%-3%.
  2. Retrofit of DC power optimisers – to limit the impact of shading and of the electrical mismatch of the strings of panels.
  3. Spare parts procurement – the inverters’ failure rate increases significantly after eight to ten years of operation, therefore in order to not be caught off-guard it is crucial to plan in advance and identify the spare parts that must be readily available to avoid long downtimes and the associated significant revenues losses.
  4. Retrofit of an anti-soiling coating – to reduce the soiling accumulation on the panels. We are running a trial of this product on one asset in Italy.

For underperforming assets (2), the solution depends on the underperforming equipment. For example, if the panels are underperforming and the warranty is not enforceable, because it has expired or because the original manufacturer is not in the market any more, or because the underperformance is still within the warranty terms, but the financial model is based on more optimistic assumptions, then the complete revamping of the panels is usually the best solution, as we have seen in many instances in the Italian market.

Similar considerations apply to the inverters. If the problem is out of warranty inverters from a manufacturer that is not willing to collaborate in resolving the operational issues and for which it is not easy to procure spare parts, then a realistic alternative to the warranty extension or to a Service Level Agreement is to replace the inverters with new and more reliable products, as we have done in the UK and in Italy.

One last example worth mentioning is the current work the Alpha Team is doing in the Italian market in relation to the replacement of the fixed supporting structures with a single-axis tracking system and of the modules with new panels. This revamping investment usually results in a significant increase in the production (more than 20%) and in the value of the assets, and, from our assessment it can be very attractive even for plants that have been performing well, in line with the assumptions in the financial model.

In conclusion there are opportunities to improve the performance of aging assets and their value. The Alpha Team can perform the requisite cost benefit analysis to allow the owner to determine whether to proceed with the remedial works and, if so, the Alpha Team can oversee full implementation of the works.