Below are the excerpts of our recent interview with Mr. Rajnikanth Umakanthan, Managing Director, 3TIER India
Let’s begin with a glimpse of your com- pany’s presence and offerings in India.
As 3TIER India, we have been active in the Indian renewables market since 2008, providing energy assessment and forecasting services via cutting-edge weather modeling, super-computing and numerical weather simulation. In 2013, we became part of Helsinki, Finland-based environmental and industrial measurement firm, Vaisala, enhancing our capacity to provide an end-to-end resource risk management service for developers, operators and investors.
Renewable energy performance is inherently affected by the weather, and Vaisala’s role in the sector is to help our clients manage this risk to build and operate the most effective assets possible. In practice, this means that we provide the measure- ment equipment and data analysis they need to conduct bankable wind and solar resource assessment campaigns, optimise project performance based on operational data, and manage the long-term financial impacts of resource variability on projects and portfolios.
To date, we have worked on over 50GW of Indian wind and solar energy capacity. In 2014, Vaisala was also selected by the Indian Ministry of New and Renewable Energy (MNRE) to create a Solar Atlas of India, which has become an invaluable reference point for investors and project developers.We expect to increase our market reach as construction ramps up and the industry develops a growing appreciation of weather as a major factor in financial performance.
What have been some of the recent developments at your organisation?
As I mentioned above, having 3TIER become a subsidiary of Vaisala has been an important step for our business and has expanded and enhanced the scope of the services we offer to renewables stakeholders in India.
This means we can now combine our high- speed computing, information services and weather modellingexpertise with our industry-leading measurement technology. This allows us to cover all of our clients’ assessment needs throughout the project lifecycle.
For example, Vaisala recently launched the SP-12 Solar Weather Station;a turnkey solar measurement system designed for utility- scale solar resource assessment and solar generation plant operational applications. This station is already in use across multiple sites in North America by developer-operators who saw the value of onsite measurement for reducing solar uncertainty and working with a single company for all of their solar resource assessment needs.
Solar Energy in India is on the surge and soon will become a trending industry. What is your outlook on Indian O&M Sector for the next 5 years?
From the recent bidding at REWA, we have seen that the unit cost for solar energy is already on par or lower than other renew- able and fossil fuel based power generation systems. The country is expected to add several Gigawatts of new solar generation capacity every year over the next 5 years.
There is a common perception in the industry that the operations and maintenance (O&M) function for solar is not as critical as it is for wind energy, owing to the fact that the solar plant does not have moving parts. However, on the contrary, the truth is that with the growing size of utility-scale plants and the falling tariff, the role of O&M will become more and more critical to ensure that solar PV plants perform as expected.
While a lot of emphasis is placed on the PV module, inverter technology, and balance-of-systems equipment, the weather component, which has a large impact on solar plant performance, has so far been largely neglected. India has seen several solar assets fail to meet their financial commitments due tounderperformance - and resource variability was one of the major contributors. It is in this area that Vaisala can offer solutions to the entire solar PV development and operations value chain, including O&M companies, in the form of advanced weather monitoring and analysis, such as our time series data tools, solar weather stations, resource assessments, operational reforecasts, and plant perfor- mance reconciliation services.
What measures should be taken for efficient costs and budgeting for profitable operations and asset management?
Conducting a comprehensive pre-construction resource assessment through an expert, independent consultant would be a great start, providing better visibility on the resource availability at the site. To date, many pre-construction energy estimates have relied on free public data and modelling tools, which largely use coarse-reso- lution, averaged weather information that does not account for long-term variability or extreme highs and lows.
While, in the days of high feed-in tariffs for solar, resource assessment was not a major concern, competitive bidding and falling tariffs are now reducing margins and driving an increased focus on this process. In today’s market, a variation in the solar resource of just a few percentage points can impact the viability of an entire project and developers are coming to realise the importance of undertaking high-quality solar resource assessments.
For operational assets, conducting seasonal reforecasts on an annual basis can help address year-to-year weather variance and set realistic annual energy production budgets for the plant. Also, having an on-going “Operational Efficiency Assessment” of the plant helps measure the performance of the plant and dive into the potential causes of over or underperformance, so that they can be resolved.
What can be done to increase performance of the project while improving the life of the project?
Lower feed-in-tariff levels exert heavy pressure on the entire PV value chain – from the developer to the EPC to the suppliers - to bring down project costs. Taking India as an example, the solar PV tariff has fallen from around INR 12.16 in 2011 to below INR 3.00 in 2017.The average capital cost per MW of PV projects has correspondingly come down from INR 120 Million in 2011 to around INR 45 Million in 2017.
Some of this tariff reduction can be attributed to the fall in price for PV modulesand commodities like steel, copper, and aluminum, coupled withan increase in project size driving economies of scale. However, there have also been other components of a PV project where we have seen cost escalations year-over-year,which offset the gains in module price reduction. Land has been getting more expensive and the cost of skilled labor has also been rising steadily in India.
When the tariff gets very competitive, the developers are pushed to squeeze their CAPEX and OPEX. When the pressure on IRR and ROI becomes extreme, we see people starting to cut corners to ensure financial viability of the project, without considering the long-term impacts of such decisions on the lifetime performance of the plant. For example, decisions around equipment choices, maintenance, and resource assessment.
Having a thorough understanding of the resource availability at the site is critical for building a viable solar project. Making assumptions on resource availability could lead to underperforming assets, which would struggle to meet their financial obligations and, in the long run,damage the industry as a whole. Solar resource should be considered as an important input to the decision-making process while building and operating a solar asset.
Additionally, in the operations phase, we must balance the costs for activities such as panel cleaning, equipment upgrades, and other repairs, with an understanding of what the return on our investments will be. The critical part of this process is understanding how much more power a plant will produce following these improvements. To do that, operators need access to reliable resource information to understand plantperformance. Companies like Vaisala that specialise in translating weather infor- mation into power forecasts are ideally positioned to fulfill this need. We can help operators understand where they are losing money and separate cases where weather – rather than equipment – is to blame, which can save significant time and money and avoid hunting down problems that don’t exist.
Anything else you would like to add for our readers.
As part of Vaisala, we are a trusted assessment partner for hundreds of developers, engineering firms, and financiers, including many of the largest and most successful energy companies in the world.
We have performed solar and wind energy assessments on all 6 continents, many in challenging locations. 3TIER India is committed to offering its world class services, products and tools to the Indian renewable energy market as we seek to help the industry achieve its objective of designing, building, and operating highly productive assets that set a high standard of financial performance for many years to come.