Servicing Solar Electric Power Systems: Opportunities and Caveats
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 collabor