Servicing Solar Electric Power Systems: Opportunities and Caveats
Posted in: July 2014
Operation and maintenance (O&M) of photovoltaic (PV) power systems is definitely electrician’s work. This is good for electrical contractors because it creates opportunities for new and interesting ways to expand service offerings and increase revenue. However, there are a few caveats to be aware of if you are considering getting into the PV O&M business. This article will provide you with a quick overview to help make informed decisions.
PV power systems range in size from a few watts for small solar lighting systems to tens of megawatts for the type of systems that large utility companies are installing. This article focuses more on commercial and utility-sized systems because the revenue they generate dwarfs the cost of O&M services. Most investors understand this and now insist on having a well-defined O&M program that includes fast response troubleshooting as well as comprehensive preventative maintenance to keep their assets producing maximum financial returns.
The rate at which PV is being installed in the U.S. has grown from just 4 megawatts of installed capacity in the year 2000 to 4,700 megawatts in 2013. That’s an average annual growth rate of 72.3 percent. The opportunities for electrical contractors in the solar industry fall into two main categories, installing PV systems and providing O&M services. Both sectors offer significant opportunities. When most people think about a growing industry like solar, they think about new systems coming online but often forget the fact that these systems will require maintenance and troubleshooting over their expected 30-year service life.
Installing contractors very often act as subcontractors to Engineering, Procurement, and Construction (EPC) companies, who develop projects and act as the prime contractor. It is certainly possible for electrical contractors to develop their own projects and be the prime contractor, but they need a team of sales people and engineers to supplement the construction side of their business. Competition for new project development is fierce, making it difficult for an electrical contractor to develop their own projects when multiple bids are being sought. However, getting work as an installing subcontractor has many opportunities. Too often installing subcontractors fall short of their promises, and EPCs are always looking for better partners to work with.
Types of Providers
O&M providers fall into two sub-categories. The first type is part of an EPC company where they service the systems that the EPC has developed. In this arrangement their field technicians often hold multiple responsibilities within the company. The second type of O&M provider is a dedicated service company whose business model focuses solely on maximizing the electricity production of PV systems after they have been installed. This business model includes a variety of service solutions that bring the greatest value to a broad base of customers including EPCs as well as owners and investors.
Many EPCs and electrical subcontractors take on O&M responsibilities for PV systems that they install but often do it without giving serious thought to this business model and especially the economics of providing these services. Serving their O&M contracts could cost them more in labor and transportation than they receive in revenue from their contracts. If this is the case, they may want to explore the benefits of outsourcing O&M services to a dedicated O&M service company. Such a win-win arrangement allows each entity to do what it does best.
Another possible opportunity for outsourcing and collaboration is to consider a third-party commissioning agent for new construction. In my experience this is the best way to ensure that installing contractors don’t lose their profits from all the workmanship warranty issues that arise after the installation. Third-party commissioning agents catch many of the errors and problems that may get missed by installers who “self-police” their work. As the saying goes, allowing the “fox to guard the henhouse” often means dead hens.
Smaller electrical contractors who want to get involved in PV O&M can also profit by collaborating with a dedicated PV O&M company. O&M service companies often manage PV assets over broad regions of the country, and it is expensive to fly their technicians out each time there is a system fault. The opportunity for local electrical contractors is to be first responders under a subcontract relationship with an O&M service company.
As Director of O&M Services for one dedicated service provider, our model is to partner with local electrical contractors to act as first responders. Our ability to immediately dispatch skilled professionals to a site is critical to success.
So what does it take to be a skilled first responder? It takes someone with experience and general understanding of PV power systems, but not necessarily a master PV troubleshooter. Similar to medical first responders, PV O&M first responders need to be able to assess the situation and communicate with the specialists. Being a fully trained PV technician would be the next level of expertise to work toward. Technicians, for example, should have studied extensively PV system operation, design, and troubleshooting and may have been certified through the National Association of Board Certified Energy Practitioners (NABCEP). This higher level of training is essential to troubleshooting complex problems, but in the end, PV power systems are much like any other electrical power systems with all the same wire, pipe, disconnects, and transformers.
The tools used to diagnose and troubleshoot PV systems include some of the same electronic meters that are already used for reading voltage, current, and resistance, but PV technicians also arm themselves with thermal (infrared) imaging cameras and current and voltage (IV) Curve tracers. We have even started using drones to quickly scan large arrays in much less time. If you like playing with diagnostic tools and learning new ways to troubleshoot electrical systems, then you’ll like the PV O&M industry.
Because of the rapid and continual growth of the solar PV industry, many electrical contractors are choosing to offer PV installation and/or O&M services to take advantage of this trend. For those contractors who already develop and install PV systems, they may want to consider outsourcing O&M and commissioning services to a dedicated PV O&M company. For those contractors who are not yet involved in the PV industry, they may want to consider a relationship with a dedicated PV O&M company as a first responder.
Jeff Gilbert is Director of Operations and Maintenance Services for Vigilant Energy Management in Rockville, Maryland. He is NABCEP PV Certified and NABCEP Thermal Certified. Learn more at www.vigilantem.com.