Elements of a Solar Asset Management Agreement

Industry Insights
Typography

Solar energy facility Operations and Maintenance (O&M) implies the solar site is monitored, cared for and inspected regularly. This is essentially maintaining the existing system. Broken things are fixed, hopefully before they break.

Asset Management is a term often used synonymously with O&M. However we believe there are some distinct differences. Asset Management entails managing the site security, meeting the utility company forecasting and safety requirements, guaranteeing the asset’s energy production and strengthening the probability for achieving the expected financial return.

Traditional O&M is more focused on maintaining the system (machinery) that is in place where Asset Management is more focused on meeting energy production and financial goals.

The primary elements of a commercial or utility solar Asset Management Agreement are the:

1. Term

The term of the agreement is simple yet critical. The time period for which the solar energy facility Asset Manager is guaranteeing their engagement is the foundation upon which they are willing to stand behind their commitments. Our typical Asset Management Agreement is set at a   5 year term and is renewable at the end of the term.

2.Scope of Services

The scope of services includes and excludes certain items. It will include daily remote operational monitoring and verification of energy production, as well as periodic site inspections. The site inspections will occur at agreed intervals and includes checking the overall system performance, electrical and mechanical visual inspection, repairing minor broken items, cleaning out enclosures, checking fences, inspecting inverter components, re-torquing electrical connections, verifying civil site conditions are stable. Services may also include cleaning solar modules, vegetation management, meter calibration, thermal imaging of wire terminations and critical equipment, and IV curve tracing.

3. Price

The price of the agreement is often stated as an annual number accompanied by an annual escalator to adjust for inflation. Invoicing may occur quarterly to cover costs of daily monitoring and response to performance issues that arise.

4. Spare Parts

Any serious power plant owner will require an immediately available source of spare parts to be stored at a location near the commercial or utility scale solar facility. The spare parts, at a minimum, may include extra solar modules, fixed rack or tracker system parts such as motor & controls, module mounting parts, wire, irradiance sensors, fuses and breakers and other specialty electrical components. For utility- scale plants, a spare step-up transformer may be desired to minimize the effect of a transformer fault. The spare transformer can prevent the facility from sitting idle for weeks or months in the event of a failure.

5. Monthly Reports

A monthly report should be generated by the Asset Manager or O&M Manager. This report should identify operational performance including uptime and availability, plus any actions taken to ensure continuous operation of the solar facility. Also the report should identify any recommended performance improvements or warranty actions taken on behalf of the system owner.

6. Performance Guarantee

The solar facility is expected to produce     a certain amount  of  energy  based  on  the design and weather predictions for  the location. A Performance Guarantee is an optional, additional companion to an O&M contract that spells out the annual energy guaranteed to be produced  by that PV system. A true Asset Management Agreement will typically include a well- defined Performance Guarantee. The solar Performance Guarantee is adjusted per actual weather experienced by the PV system and “trued up” on an annual basis.

7. Performance Guarantee Damages

A performance Guarantee is only as strong as the carrot or stick it holds. Typically, there is a form of payment to the site owner if the site does not perform to weather-adjusted expectations.

8. Response Time

Unexpected  issues  that  arise   need   to be met with reasonable response times, depending on the severity of the  issue. The O&M Agreement should clearly spell out the O&M provider’s required response time to site emergencies such as an unexpected system faults and force majeure events.

In our experience, solar array Asset Management requires a watchful  eye  at all times. The financial return on investment is only as predictable as the level of rigor practiced in daily system performance

 monitoring and onsite maintenance activities. There are a wide variety of solar power facility Asset Management and O&M providers, all with unique perspectives and expertise focus areas, and levels of rigor. We recommend that you check credentials and inspect their managed sites to determine if there really is a fit between your needs and their expectations.

Credits: Blue Oak Energy

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