21/03/2018 US solar market boom cuts O&M costs years ahead of forecast | New Energy Update

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US solar market boom cuts O&M costs

years ahead of forecast
Nov 21, 2016

Innovations in plant design, component improvements and the clustering of

maintenance services are pushing O&M costs close to $8,000/MW/yr, the cost the
National Renewable Energy Laboratory forecast for 2020, industry experts told PV
Insider.
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Falling component prices and installation costs have

driven down plant lifetime costs and raised the Wind O&M: Dallas
importance of O&M expenses. U.S. installations have Dallas
hiked on the back of Investment Tax Credits (ITCs) and Apr 16, 2018 to Apr 18, 2018
O&M providers have responded to increasing
competition by widening their range of services. MENA New Energy
Dubai, United Arab Emirates
Developers are optimizing plant
The levelized cost of energy (LCOE) for plants in high Apr 24, 2018 to Apr 25, 2018
layout and labor resources to
solar resource areas is forecast to fall from $81/MWh in
lower maintenance costs.
2014 to below $50/MWh by 2020 under an aggressive US Offshore Wind
(Image credit:
cost reduction scenario, according to the National Boston, Massachusetts, USA
RoschetzkyIstockPhoto)
Renewable Energy Laboratory's (NREL's) 2016 Annual Jun 7, 2018 to Jun 8, 2018
Technology Baseline (ATB) cost report, published in
Related Articles
September.

Innovations in solar plant Latest from MENA New Energy

The capital cost of projects in high irradiation areas
could drop by 44% by 2020 to $1.1 million/MW and
assembly drive costs 2017
fixed operating and maintenance expenses (FOM) are towards $1 per watt in

forecast to fall by 55% to $8,000/MW/yr, NREL said. 2017 Middle East leaders seek solar, wind
innovators to support growth
 

                             US O&M cost forecast (NREL)

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21/03/2018 US solar market boom cuts O&M costs years ahead of forecast | New Energy Update

Costs represented for different % load factors and cost reduction scenarios (low, middle
and high.)

Data source: NREL's 2016 Annual Technology Baseline (ATB) report. 

Faster progress

Economies of scale, component improvements, and optimized plant design are driving
down O&M costs and the NREL's projections of $8,000/MW/yr are already within sight.

O&M costs for large U.S. projects have halved in the last two or three years, Wayne Mays,
Director of Engineering at developer Avangrid renewables, a subsidiary of Iberdrola, said.

“For a 2018 project we are already seeing prices in the [$9,000/MW/yr] range,” he said.

High activity areas such as Kern county in California are seeing particularly competitive
prices for installation and O&M as developers benefit from economies of scale and
clustering of projects, Mays said.

"I have seen a critical mass of O&M people assigned to serve a number of PV plants in an
area – with one person assigned to each plant (but with the flexibility to support multiple
plants)," he said.

"That's going to be a huge advantage...I would guess that an isolated project might pay 20%
or more for O&M," he said.

                             US cumulative solar capacity up to Q2 2016

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21/03/2018 US solar market boom cuts O&M costs years ahead of forecast | New Energy Update

Source: GTM Research, Solar Energy Industry Association.

Bloomberg New Energy Finance (BNEF) is currently benchmarking global utility-scale O&M
costs at around $10,000/MW/yr, based on the latest calculations by developers, Jenny
Chase, Head of Solar Analysis at BNEF, told PV Insider.

The introduction of tenders to drive up international competition in PV projects has led to

record-low project prices in Chile and the United Arab Emirates (U.A.E.) this year,
raising the bar for plant efficiency.

"What all these bids have in common is that you can't really build them without looking at
roughly $10,000/MW/yr," Chase said.

Inverter gains

Inverters are a main source of PV plant failure and suppliers have sought to improve
performance and reliability, inventing new materials and systems while harnessing big
data analytics to increase yields.

NREL's ATB report assumes inverter lifetimes will increase from an average 15 years to 20
years by 2020 under the low-cost scenario, Wesley Cole, NREL energy analyst and co-author
of the report, told PV Insider.

"These is a piece coming from a cheaper inverter and a piece coming from having a
cheaper inverter last longer... and there is the assumption that the efficiency of the inverter
is going to increase," he said.

Indeed, large inverter suppliers have recently guaranteed lifespans of 20 to 25 years and
these lifespans continue to increase as technology is improved.

New inverter designs are also featuring improved accessibility of components to minimize
downtimes, Mays noted.

“I think that’s a really excellent innovation…You’ve got a fairly large part of your solar project
down when you lose an inverter,” he said.

Some developers have also shifted from holding whole new inverters on site to keeping
replacement parts instead.

Smaller three phase string inverters are also becoming more popular and are expected to
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21/03/2018 US solar market boom cuts O&M costs years ahead of forecast | New Energy Update
Smaller three phase string inverters are also becoming more popular and are expected to
represent 40% of the global utility-scale market by 2020, according to IHS.

Plant design

Developers are also introducing new plant designs based on growing project experience to
accelerate installation times and reduce O&M costs.

"A really large and significant component is the cost of cleaning," Chase said.

Large plant projects are optimizing the space between rows to access panels using cleaning
vehicles and in harsh environments developers are designing plants to protect key
components, such as inverters, from soiling, she said.

Tracker designs have also evolved and new tracker systems place drive motors on each row
to avoid blocking access to the panels, Mays said.

"It really makes it easier to do that vegetation management and that helps in controlling
costs as well,” he said.

The introduction of robotic cleaning technology could lower costs further, Chase said.

In Israel, where labor costs are higher than in other parts of the Middle East, technology
firm Ecoppia has developed remotely controlled robotic cleaning system which does not
require water.

Ecoppia's technology is being considered in areas lacking access to low cost labor, Chase
said.

Asset owners are also increasingly investing in automated monitoring and data
analytics to identify or plan for system outages and avoid unnecessary labor expenses.

Asset data is allowing developers to build more precise pre-operations strategies,

improving the modelling of energy production and operations costs.

Thinner margins

Some U.S. operators are now performing O&M activities in-house and many others are
choosing to select independent providers for key activities, such as inverter maintenance
and vegetation management, rather than contract out the entire work.

Experts believe increasing O&M market competition will narrow margins and reduce the
prices offered to operators.

"There's a lot of balance of system overhead on the O&M side that could be pushed down
and squeezed out as there is more competition and entities get more efficient at managing
O&M contracts," Cole said.

According to Chase, U.S. incentives, in particular the Investment Tax Credit (ITC), are
preventing prices from falling in line with some other markets.

I think [U.S.] prices are higher because EPCs can get away with it due to the generosity of
U.S. incentives. Plus you can buy a lot of different packages of O&M service level, and if you
prepay in the U.S. you can claim the ITC on it," she said.

PV Insider
 

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