Solar O&M Shortcuts Lead to Higher Costs Later, Experts Say

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Two separate analyses from Origis Services and Wood Mackenzie suggest cost-cutting now for maintaining solar projects leads to greater expenses later.

Prices for utility-scale solar operations and maintenance contracts have dropped across the globe in recent years, driven by competitive auctions and fewer services being provided. But prices at the bottom, think $3 to $5 per kilowatt per year, are not without their drawbacks, experts say.

Cutting corners on the full “scope of service” contract, which includes site maintenance like vegetation management and equipment checks, often means greater overall costs during a project’s lifetime, according to new research published by kWh Analytics and conducted separately by Wood Mackenzie and Origis Services, a unit of solar developer Origis Energy that provides O&M for internal projects and other owners.

“This trend of squeezing O&M pricing is coming at the expense of the owner and the expense of the long-term project,” said Josh Corbitt, Origis Services’ director of business development for O&M and asset management. “Those costs are going somewhere, and they’re being shifted down the road — more often than not at a higher price for the customer.”

Analyzing the number of hours spent on corrective work for a 2-gigawatt portfolio and how much that work cost, Origis found that asset owners can end up paying nearly 30 percent more than planned if their original contract leaves out “corrective maintenance,” which includes repairing and replacing faulty equipment like inverters and modules.

“Inverters are constantly going down and going offline,” said Corbitt. “Somebody has to be there onsite to troubleshoot.”

Origis prefers including corrective maintenance in contracts it fills and those for its own projects, said Corbitt. With corrective maintenance included in the contract, Origis Services is better able to staff its sites to make sure the needed technicians are available when issues do crop up. For its own projects, the company has identified a “sweet spot” that includes 70 percent of estimated corrective maintenance in a contract’s annual service fee.

As an O&M provider, Origis has a vested interest in increasing the price of those contracts. But the company’s results align with independent analysis from Wood Mackenzie. The lower cost of contemporary O&M contracts is often “erroneous,” said the consultancy in a paper published Wednesday, because those contracts often drop necessary maintenance work in favor of cheaper top-line figures.

“Prices might not include some important parts of operation and maintenance just because they want to reflect the lowest figure possible,” said Leila Garcia da Fonseca, a principal analyst at WoodMac.

2020-06-24T06:53:40-07:00June 17th, 2020|News|