Developers face varied challenges in building and managing a rooftop solar asset portfolio and some of the key challenges have been highlighted below.
Mr. Gavish Gupta Manager – Corporate Development, Fourth Partner
The rooftop solar market is expected to grow to a market size of 20 GW by 2022 (15x growth of current size). We expect a large contribution of this portfolio to come from OPEX projects where the client (off taker) enters into a long-term power purchase agreement with the project developer. Developers face varied challenges in building and managing a rooftop solar asset portfolio and some of the key challenges have been highlighted below.
Achieving scale presents the biggest challenge for any rooftop solar developer given the relatively small size of each rooftop installation. Every project goes through the processes of business development, technical feasibility assessment, contract negotiation, regulatory approval, asset financing, installation and commissioning. Moreover, the contracts are not standardised and there are several permutations to consider while finding the right match that fits the client’s requirements. These time-consuming processes hinder scalability and make rooftop solar a resource intensive business. At Fourth Partner Energy we have built a team of over 140 people today across 10 offices in India to be able to build and manage this business.
Rooftop solar presents a unique challenge with respect to credit risk of the clients. Since these plants are set up under long term agreements (varying from 10 years to 25 years), evaluating and mitigating risks associated with the credit profile of such clients becomes critical. Besides, the contract laws in India are not the strongest. Our sales team at Fourth Partner Energy dons their financier hat and are ably supported by a strong risk assessment team.
Sometimes we do hear of irrational pricing by some players, and we wish players demonstrated more maturity on this front. We have walked away from such contracts, and have seen several cases where the same customers are still waiting for solar players to build the plant.
Lastly, at a policy level, while we are pleasantly surprised by the initiatives taken by the Government, the market is still in its nascent stages and lacks uniform understanding of these policies. This leads to unnecessary delays in obtaining requisite approvals and in financial loss. We have a dedicated team managing CEIG approvals and Net Metering for our projects across India.
The rooftop solar market is evolving continuously and project developers need to continuously apprise themselves of new challenges and opportunities.
Hitaksh Sachar Director, Asun Solar Power (P) Ltd.
The Challenges start right from the stage of signing the PPA to proper execution, Net metering / CEIG and O&M. However, DEVELOPING A SOLAR ASSET NOW IS NOT AS CRITICAL AS MANAGING CONSTANT PLANT PERFORMANCE.
The Industry is matured and has evolved several competent players in the market who are responsible and credible in executing the Solar Power Projects. Developers have even standardised their Bill of Materials and their requirements are taken care by EPC Contractors.
1. Finding the right O&M Partner: But once the Number of Assets increase, Companies are striving to achieve Optimal Performance through EPC and O&M Contractors.
2. O&M and Asset management Disconnect:
We feel there is a huge gap in the market for O&M Companies. Developers are now facing below mentioned issues:
2.1. Proper Reporting:Data does not help manage all sought for aspects and if it needs to be constructed, it takes too much time to generate the reports. Data needs to be designed to accurately maintain and manage techno commercial aspects of PV assets.
2.2. Wasted Time: We as an industry are spending a lot of human hours generating reports on each PV site or even more alarming, we don’t know how many “man hours” we are spending to amass, validate, analyze and communicate the necessary information to maintain and manage our PV portfolios. This is definitely not accounted properly while bidding tariffs.
2.3. The O&M, AM Disconnect:The disconnect between information tracking operations and maintenance (O&M) and asset management (AM) activities vary with different goals and objectives both are trying to achieve. Critical Aspects being:
- Streamlining O&M in field efficiency
- Integrating monitoring into overall reporting,
- Integrating O&M reporting with asset management,
Aspects of solar PV which can be addressed effectively with a more holistic approach to data generation and reporting include:
- Spare parts
- Preventative maintenance labor
- Corrective maintenance labor
- Software Costs (Monitoring & Management platforms)
- Asset Management cost and/or internal labor
3. Plant Rework and Warranty Claims:
There needs to be a proper robust mechanism within the AM structure - wherein the O&M team is made responsible for timely checks and balances of failure in critical components and plant repairs including insurance claims.
4. Maintaining Plant as per Clients standards and timings:
Though the Asset is created on client’s rooftop; all safety and other rules and procedures of the client need to be strictly adhered. No Asset Manager would like to spoil its relationship with its client during the term. This ensures smooth cash flow from the plant.
Over the years Asun AMC has also developed its team with highly skilled in-house engineers providing the desired O&M services suiting individual Client needs. Our Regular services include:
§ Cleaning panels, Clearing vegetation, bird drops, shading from nearby trees, plants etc.,
§ Checking electrical connections (thermal imaging), loose connections, string current,
§ Calibration: Sensors, SCADA, Monitoring system,
§ Inverter functionality, Corrective, reactive, Ad-hoc Maintenance,
§ Condition based Maintenance (challenging sites),
§ Diagnosing abnormal behavior in the power plant, Alarm handling (Response time 48 hrs.) – Identification of problem.
§ Notifying Supplier faults
§ Management of Repair /upgrades (Civil, mechanical, electrical)
§ Reporting - Periodical reporting on weekly basis)
§ Spare Parts (mc4 connectors, fuses, spare electrical, inverter in case of faults will be provided by Asun AMC)
§ Warranty claim assistance
Mr. Umakant Shende, COO, CleanMax Solar
Solar energy is one of the fastest growing industries in India, and with the government’s aim to install 175 Gigawatts (GW) of renewable power by 2022 there is a sudden increase in the adoption of solar energy in all customer segments, especially corporate India. While the rooftop solar industry is innovating different concepts, there are still several challenges in managing a Rooftop Solar Asset Portfolio. Some of these challenges are given below:
Rooftop systems are installed on-site and are distributed across multiple roofs/areas in the premises with several points of injection of electricity. This leads to challenges in detection and pin-pointing of system breakdowns. Remote monitoring the plant generation can help reduce the issue to some extent, as it leads to quick turnaround time in case of non-generation from the plant because of system faults. CleanMax installs cloud based remote monitoring system for its installations, and leads to very efficient checks of the system.
Another challenge is managing the local administration and protocols of the region. Different clients have different systems for billing and payments. Net metering process and permissions are varying depending on the state and DISCOMS. The application process is tedious and even after the grants, the bills from various DISCOMS do not reflect the credit to the offtaker, which can further create issues for solar billings. Safety of the personnel while maintaining the solar plants is of utmost importance and all protocols at the client site need to be followed. Emergencies and force majeure come with problems of their own.
Ms Ritu Lal, Vice President- Business Development
Indian Solar sector has received great commendations. With drastic decline in solar energy tariffs from INR 17/KWh to INR 3 per unit recently paves the path for rooftop solar growth. Facilities like excise duty exemption, custom duty exemption and foreign investments pouring in have helped states in India to install rooftop solar plants with ease. However, challenges still exist. The main challenge that remains is that of the client credit risk and continuity risk throughout the PPA term- as PPA terms tend to be of long term somewhere around 15-25 years, hence it is very essential to check the creditworthiness of the client for the long term. Associated with the client credit risk is another risk of timely payments. Since the asset is located on the client’s premises, there is little that the developer can do in case of non-payment (unlike the Discom, which can disconnect the power of the consumer). Removing the plant from the rooftop is usually the last resort, as other than modules and inverters, many other important materials (including structures and cables) cannot be reused. The modules too, may get damaged since any micro-cracks may not be visible to the naked eye during the transfer of the plant. In addition to these cost, the plant is idle during the time taken to shift the plant and re-erect it. Sometime later in the future it is possible that the client may wish to redesign the building on whose rooftop the solar plant is located. A clause regarding the cost-bearing by the client for such an eventuality can be covered in the PPA itself. However, the risk of damage does remain. Another unforeseen risk is that of the performance of the pant as it is possible that despite using the most sophisticated and reliable satellite data, the actual generation at a site varies from the forecast. In case the variation is high, it can lead to lower financial returns on the project. Repairs and replacement is another risk factor as repairs of the modules and inverters can adversely impact the pant generation. Hence the lost generation can never really be recovered. Even taller buildings and obstructions can come up post installation of the rooftop plant causing partial or total shading of the plant. Hence leading to shading losses. Net metering policy9 the excess energy can be fed back into the grid) becomes viable only when state’s net metering policy is favorable (many Industrial and Commercial establishments are shut on weekends). However, solar energy can be only exported to the grid as long as the grid is functioning. Therefore, if the grid electricity availability to a site changes in the future, expected gains from net metering will not materialize, putting pressure on the client’s adherence to the PPA. In case of a disruptive new technology that becomes commercially available that helps in bringing down costs or increasing solar efficiency, once again, the PPA’s may be threatened. While the likelihood of such a disruption occurring in the next 5 years or so may not be too high, it is certainly possible in the next 1-15 years.Apart from the challenges mentioned, changes in the policy and taxation becomes a key challenge putting pressure on the client’s adherence to the PPA. Primarily the cost of solar power is lower than the grid power. Introduction of taxes and levies on solar power may reduce or erode the savings vis a vis grid power.
Pratyush Kumar Thakur, COO, Statkraft BLP Solar Solutions Private Ltd
In India there are several challenges associated with managing rooftop assets – especially within the rooftop PPA model.
The most important aspect being cleaning, asset owners need to ensure availability of dedicated staff for regular cleaning. Solar assets also need clean water at site for cleaning. This can be difficult in remote areas – robotic cleaning may not be financially viable for rooftop assets. Checking for soft water availability, before asset installation, along with providing basic training to the staff can ensure on-schedule and within-budget maintenance.
We also need continuous internet connectivity to monitor the generation from the larger rooftop assets, as well do predictive maintenance. We also need easy accessibility to transport spares or to study and rectify a breakdown. Uninterrupted internet connectivity as well as easy accessibility can be problematic for installations in remote areas.
Within cities, as more industries develop, higher pollution makes it more difficult to maintain solar panels and effectively remove particle deposition. Also, the development of any high-rise buildings next to the rooftop plant can significantly alter irradiation for the plant and thus, the output.
Security is also critical in a rooftop asset. These assets may become targets for theft or vandalism. There might be adverse impact due to negligence of staff within the consumer campus or due to wildlife surrounding the property. Presence of rodents, pigeons, squirrels etc can cause damage to the cabling within the plant. As separate security personnel cannot be assigned to each rooftop asset, clients generally assume the responsibility of the safety of the asset, as they are already maintaining security of the property.
Even with the challenges, rooftop solar has huge potential in India and is a great opportunity for both consumers as well as developers to increase the country’s power capacity in a non-polluting manner.