by Marco Dorothal, Solarplaza
On the 3rd of October 2017, Solarplaza hosted a webinar on operations and maintenance lessons learned from past years in emerging markets, as well as asset management in Latin America: Operational experience in Chile - Lessons learned for emerging markets in Latin America. It was organized in the run-up to the 2-day Solar Asset Management Latin America (SAM LATAM) conference organized in Santiago de Chile on the 17th and 18th of October, 2017.
Marcel Langone, project manager at Solarplaza, was joined by Nicolás Rossel, O&M customer account manager at EDF Renewable Services, and Sergio San MartÍn, Country Manager for Chile at Blue Tree Asset Management, to give an in-depth look at the past operational experiences in Chile and how these can be anticipated and applied to other emerging markets in Latin America. The entire video recording of the webinar and the speakers’ slides can be freely accessed here.
Nicolas Rossel, O&M customer account manager at EDF Renewable Services with experience in the development of O&M businesses in Chile as well as in Latin American market, argues that interactions with authorities and grid operators are highly important when it comes to solar PV control centers. He states that the key takeaways for entering a new market are early engagement, good communication with grid operators and interaction with players that have already been active in that market. This can help new players understand what is going on in the market and how to best approach the situation regarding control centers.
When it comes to Chile, there are several operational issues that have to be dealt with on a day to day basis. One of those issues is solar volatility, which encompases different threats to the generation of solar energy, such as frequency deviations and cloud variability. These threats, especially cloud variability, can influence the production of solar energy to such an extent that the capacity can drop from 40MW to below 1MW in a matter of minutes or even seconds.
The best way to engage grid operators in light of these solar threats, according to Nicolas, is by engaging early in a collaborative way, starting a dialog as soon as possible by organizing conversations and meetings. Because Latin America tends to be a face-to-face place, players have to evaluate and analyze what the best approach is.
The most critical point for an O&M company involves the process of handing over the project from an EPC party to an O&M party. It is highly important to have O&M involvement as early as possible because O&M players are able to foresee problems and threats that others will not.
According to Nicolas, questions worth asking during the commissioning stage to improve communication with grid operators include: Is this a situation only happening to me or is this situation also affecting other projects in the area?; Is this a situation that impacts other technologies in the area?; Does this require formal treatment or a more informal face-to-face treatment? By posing these questions, one can already start forming strategies and different approaches to handle solar threats when entering new markets.
Early to Mid-stage O&M
During the early stages of O&M, it is recommended to conduct thorough research on the realities of the new market. Research is needed to clarify whether or not the market is subsidized or a free market, such as the case with Chilean solar PV market. This research helps to give good insights into the level of competition within the market, as well as future growth forecasts. It is also important to know if a project has a PPA in place or if its power is going to be sold on the spot market.
When entering a new market, it is also important to look at ‘washing economics’. Washing and cleaning solar panels is an interesting topic as the majority of people think it's either the exclusive job of asset management or O&M. However, it actually takes good communication between the two to consider exactly when to wash and when to postpone the wash. On one hand, operations managers have the day to day know-how, for example, the different weather patterns present in a region or the possibility of having construction work in an area that could kick up dust and end up dirtying the solar panels. Asset managers, on the other hand, are in a better position to make an economic argument on the specific time that the solar panels need to be washed.
Scope of Asset Management
According to Sergio San Martin, the core components of asset management involve reducing uncertainties and risks, while at the same time increasing asset profitability. There are also different tasks involved, for instance book keeping, monitoring of the assets or contract management (including the O&M). Serio believes that it is not just about performing those tasks, but it is also equally important to keep a standard level of service throughout the whole lifecycle of an asset. Doing so, presents different challenges for asset managers. “Global assets managers”, as Sergio says, should understand all of the interactions and differences in order to develop solutions tailored to the particular interest and backgrounds of customers, which in the end are investors and owners of solar PV plants.
Outsourcing vs In-house Asset Management
Making a decision on whether or not to implement in-house asset management activities or outsource those practices can be complicated, but it can be divided and analyzed in 3 sections: Cost, Know-How and Time.
Outsourcing has been found to have the best use for small or mid size project portfolios regarding costs effectiveness, especially when dealing with cross region/country portfolios affected by different regulations. Companies that have multiple big scale projects within one country are more capable of dealing with hidden costs and potential liabilities of building an in-house team.
The benefit of having an in-house team is that the knowledge acquired can become a long-term asset for the company, eventually becoming part of the core competences. The downside is that it will take much longer to hire a team and develop the knowledge that is needed. Players with smaller portfolios decide to outsource their asset management to acquire knowledge and experience immediately and accelerate the transferring of knowledge. It also reduces uncertainty from operational and compliance risks.
Sergio concludes by emphasizing that there is still much room for potential growth in emerging markets, however players have to take into consideration that the levels of competitiveness in the market are also increasing. Margins are shrinking and until now it is predicted to continue this way for the foreseeable future. That is why it is highly important to have partners that fully understand the market from a commercial point of view, as well as from a technical perspective. By doing so, it is possible to build good communication lines between asset management and operations & maintenance, thereby creating a balanced and synchronized flow of information that can result in risk mitigation and opportunity exploitation.