Challenges To Effective Cost Management In Solar O&M

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In light of narrowing developer margins owing to falling solar power tariffs, how do you optimise costs and ensure better savings? This is one tough question for the solar power operations and maintenance (O&M) segment. In order to reduce unplanned downtime, and improve revenues through better generation, more efficient O&M practices are required.

Today, developers and plant operators are being compelled to reduce operational expenses and optimise generation to increase the dwindling profit margins. Besides, the recent imposition of safeguard duties, and goods and services tax (GST) offers little relief from the pressure already built up.

While large asset owners will continue to achieve economies of scale because most of their O&M activities are managed in-house. However, mid- and small-size asset owners will continue to face cost and profit margin pressures, leading to outsourcing of O&M activities. Manpower and module cleaning account for the largest share of O&M expenses at a solar power plant.

O&M costs can be optimised by recalibrating some specific parameters of the plant which include module cleaning that considers soiling rates, cleaning costs and manpower optimisation through centralisation and technology substitution. In view of the current scenario, it is important for cost management strategies in solar O&M to evolve with the changing times.

Let’s understand some expert views on efficient cost management practices in solar O&M below:

According to Vector Green Energy, “It is time that the industry starts approaching O&M costs from an holistic perspective and the traditional O&M setup moves towards a comprehensive Asset Management service. For any measures taken to improve cost efficiencies, which are being realized through any optimization exercise, should be looked at critically on the basis of its potential to minimize the risks for the asset, as well as ability of such measures to ensure that the optimizations lasts for a significant period of project life.”

The industry also needs to avoid the temptation to demonstrate cost efficiencies either by ignoring regular plant health analysis in early days, or by failing to timely address the expected wear and tear, to create shareholder wealth for the project life.

Challenges to effective cost management in Solar O&M

A sustained growth phase adds to heterogeneity in the portfolio where multiple OEMs, with different contract structure and varied performance standards becomes a key challenge to manage costs effectively. Also sustaining cost efficiency measures for a longer period is a key challenge given the fact that solar PV modules are expected to degrade, and operating costs are expected to go up on account of wear and tear, as well as inflation.

Growth Strategies to Stay in Sync with Market Demand, While Promoting Cost Efficiency

Adopting a holistic asset management practice with focus on integration of best practices in the portfolio and standardization of O&M practices, reporting and contract KPIs will drive cost efficiencies as well as optimal portfolio performance in a rapidly scaled up portfolio. The industry also needs to graduate from regular break down / preventive maintenance to predictive maintenance, to be able to identify the areas that require advance attention to promote cost efficiencies. Continual and effective utilization of data analytics helps in identifying the areas where cost efficiencies can be brought in.

Mr. Majesh Nayak, Director & COO, Oorjan Cleantech Pvt. Ltd.

The fast-growing Indian solar market and the narrowing profit margins due to lowering solar tariffs has made the operations and maintenance (O&M) of solar plants an important business segment. Managing O&M costs (comprising about 1-1.5% p.a. of the plant capex) and ensuring better quality is key to ensuring improved solar generation and profitability to considerable extent (about 30%). The major components of the O&M costs comprise of module cleaning, manpower and security (over 40%) followed by capital expenses, tools and spares, etc. O&M activities could range from supervision and monitoring, to maintenance, to general plant administration.

O&M of solar plants involves difficulty since these plants may either be spread on large acres of land or may be granular, but distributed across roofs. The unavailability of skilled labour is another major issue faced by the O&M industry. Other challenges include transportation of men, machines and spares across sites, the evolving laws and regulations, etc.

Mix of technology and effective resource planning will help solve the above challenges and optimize costs while improving quality of the services. Using remote monitoring technology and easy web-based comprehensive dashboard, like the ones developed by us at Oorjan, helps efficient operations as well as save on costs by reducing underutilisation of resources. Further, resource planning is the key. Say, should the cleaning activity be done manually or should it be automated, etc. setting the Key Performance Indicators (KPIs) to measure the service quality and costs is important here. Using various budgeting and financial models like cost linked budgeting and use of latest technologies such as drone technology and robotic cleaning will optimize costs to great extents, while ensuring better quality service. Thus, effective planning and budgeting of resources coupled with technology adoption and centralisation of decision making will help achieve cost optimisation with quality services.

Mr. Sandeep Jadhav, COO, Mahindra TEQO

Challenges to effective cost management in Solar O&M

Solar Operations & Maintenance (O&M) is a labour-intensive
industry which accounts for huge operational cost. The key
O&M activities that impact operational costs are security, vegetation removal and module
cleaning.

A) Security: Solar PV plants are usually constructed in remote locations which need
proper surveillance considering theft, dacoity and possible detriment. Given the 5x to
10x growth of solar plants in the recent past, managing the security activities of these
power plants through conventional methods has created one of the major challenges
for the industry.

B) Module Cleaning: Solar module cleaning is the most important scheduled maintenance
activity which contributes up to 40 percent of the overall O&M revenue. With many
solar power plants located in drought-prone and desert-like areas, non-availability of
water for cleaning modules is going to pose a huge challenge in the future.

C) Lack of skilled manpower: Operators spend a large amount of time and resources on
training local technicians for good O&M practices and finding trained manpower, plus
retention is a hard task.

D) Vegetation Removal: Uncontrolled vegetation disrupts maintenance and causes
shadows on PV arrays, leading to hot spots and generation loss. Dry vegetation
collected leads to a higher risk of fire. Thus, weed removal is a cost and resource
burden to any solar project.

Growth Strategies to Stay in Sync with Market Demand, While Promoting Cost Efficiency

Innovation has a central role at Mahindra Teqo in developing the growth strategies for local
and global markets. The main purpose of our work is to build O&M of the future – “High
Tech, High-Value, High-Quality” with focus on decreasing the Operational Expenditure per
MW and increase the production efficiency by infusing the innovative solutions powered
by technology to drive operational and cost efficiency through various ways like:

Hi-Tech, Optimized and Local

Overall, module cleaning and manpower costs together constitute the bulk of solar plant O&M costs which can be significantly reduced with automation and digitization such as robotic cleaning solutions, AI/ML based predictive system, Agro PV Model and aerial drones for site inspection.

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