O&M - and output - guarantee

Some of the Operation and Maintenance (O&M) issues relating to PV projects are very similar to those arising on other projects, but some significant differences must be noted.

While in wind projects the technical availability of power generation benchmark usually mentioned is 97%, no such agreed figure yet exists for PV projects. Why is this? It’s easy to see how the technical availability of a wind turbine can be established; it has to be ready for generation on 355 days per year. For PV projects, the issue is more complex. First, it has to be decided at which level availability is measured; should this relate to the entire project, to a panel of PV modules, or each individual module?

It would seem impossible to guarantee the availability of the entire project where the failure of a single module would mean that the project is not available in its entirety; in fact the likelihood that one of the thousands of modules in a large project stops working at some point is very high. Also, the availability has to be defined very clearly. If, for example, there is dirt or snow on part of a PV module, and this stops the module from performing fully, does it mean that the module or panel is available for generation, or not?

In reality most O&M agreements, rather than having availability guarantees, specify that the contractor should only guarantee reaction time. The issue here is that the mere presence of an engineer on site does not necessarily guarantee that the project will become fully-operating immediately, and close attention should be paid to the obligations of the O&M contractor on site.

Finances and costs

Energy derived from PV still has cost issues, and is therefore not a technology for every site and country. Even if prices continue to come down over the next few years, which should happen if the silicon bottleneck is truly overcome and as market-driven technology results in better and more efficient products, the costs of producing one kWh of energy from PV may still be higher than for traditional energy and other renewable sources (especially if external factors such as the cost to the environment of fossil fuels continue to not be internalised).

The investment costs for PV projects currently range from between around 5,500- 6,500 per kWp installed capacity, depending of course on the technology used and the country. This is about four times higher than the costs for investing in onshore wind energy.

Such investment currently only makes sense in countries that either have fantastic solar radiation, or a very robust incentive system for driving the technology take up in the marketplace. Germany, for example, is not a particularly sunny country compared to many places, but the feed-in-tariff (FiT) of more than 0.45/kWh has led to Germany playing host to about half of the world’s total PV projects.

Spain appears to be following the German lead, having introduced a FiT of almost the same level, and, the fact that it benefits from better solar radiation conditions effectively makes the country the new El Dorado for PV projects; the Spanish Government appears to have noticed this trend, and is reputedly discussing measures to limit the applicability of the high FiT – as well as other measures designed to cool the market down.

Summary and outlook

The PV market still suffers from an astute shortage of silicon and, as a consequence, modules. Not only are prices high but there are not as many projects as there should be. All this could change in a few years though, and the PV market should gain a greater share of the renewable energy sector.

In many respects the PV market will always stand alone as manufacturers of PV modules don’t suffer from the same critical position as wind turbine manufacturers do. The PV market will, for the foreseeable future, have a role to play for independent EPC contractors; and the documentation and contracts which regulate their – and everybody else’s – role in a project are still relatively new and in the process of being standardised.

One thing is clear: PV projects alone cannot solve the world’s energy problems. One advantage of PV is that the power curve is very predictable. No electricity is generated at night (or in the early hours of the morning and late in the evening) and peak PV generation usually occurs at noon. So on the one hand PV can only be part of the total mix of renewable energy projects. But it offers a great opportunity for investment with very little technology risk.

Cost implications for PV modules II - next generation solar

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