From pv magazine 11/2021
Solar O&M is improving and its importance in the renewable energy and financial sector is also increasing. As renewables take a bigger share of the energy mix, the trading of these assets will also become a bigger part of the financial system. This means that the long-term reliability and output of PV power plants will be more important than ever, with investors needing confidence that their investment will be safe over the long term.
Thanks to another emerging trend, it is not just large fund managers who will be looking for assurance that solar plants can stand the test of time. In 2021, the tokenized trading of assets is emerging as a potentially transformative shift in our financial world. In the past, investing in a solar plant would typically be limited to large entities taking a massive stake in a project. Now, we are seeing renewables-focused investment platforms like RealPort emerging, which are looking to open up the possibility of making smaller investments in these large utility-scale plants – think family offices or larger individual investors buying a fraction of an existing plant.
One issue this brings up is quality assurance. A large company buying a solar plant outright will undoubtedly have the means to do ample due diligence on the ins and outs of an asset, including site visits. For a smaller family office that may not always be possible. This brings us back to the importance of trusted and effective O&M providers. As the trading of these assets becomes more commonplace, more investors will expect O&M providers with a verifiable track record and effective data-driven operations.
The past decade especially has seen significant breakthroughs in terms of panel technology. Modules are getting more efficient thanks to increasing cell sizes and technologies, like bifacial cells, and modules are leading to higher energy yields. However, this maturation of module technology is also resulting in a bottoming out in terms of cost reductions. Thankfully, O&M is quickly emerging as a new avenue to pursue cost savings. In fact, Michael Taylor, senior analyst at IRENA, listed improved reliability and increased digitization in O&M as key drivers of decreasing solar costs through the 2030s
Another trend which is emerging is a shift to third-party O&M providers. In the past, O&M proved to be a profitable endeavor for many of the big solar players – allowing for a tight vertical integration. However, as the complexity of the role of O&M increases, plant owners are seeing more value from opting to outsource to third party companies deeply specialized on the topic. This is largely due to the data and expertise that can be gathered from having a larger and more varied portfolio of projects.
From 2019 to 2020, the market share for third-party independent service providers in solar O&M grew 9%, reaching 27%. Much of this growth came from module producers exiting the space to focus on their core business. Consolidation has also played a key factor in the development of the industry – the top 15 O&M providers now represent 57% of global market capacity, and 72% of new capacity additions over the last year. This should all be no surprise when you factor in the inherent gains in data collection and utilization possible with a larger portfolio.
NovaSource Power has kept a keen eye on the trends emerging in the solar industry and is positioning itself to better serve both asset owners, as well as those reliant on the energy produced. It is clear that the era of rapid modules and component cost reduction is slowing down and making way for one focused more on the security and long-standing investment outlook of projects. Although this is a relatively new trend, NovaSource believes it is one that will play an integral role in the success of the industry, and thus the energy transition in the coming decade.
It is incredibly exciting to see the developments in the industry, and across renewables as a whole. However, it is vital that we keep our foot on the floor and push forward. As solar continues to assert its place in our future energy systems, NovaSource will be working with the solar industry to make sustainable solutions that serve everyone.
About the author
Timo Moeller is a vice president at NovaSource and the company’s managing director for EMEA and APAC. He is responsible for strategic growth and operational excellence in international markets. Prior to joining NovaSource, he served as head of commercial and revenue for First Solar’s energy services division, where he had the mandate to grow the market leadership position in the solar O&M space. He holds an electrical engineering degree from the Technical College Worms, Germany, and a business management degree from the Academy of Administration and Business Management Mannheim, Germany.
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