[RE-wrenches] Volcanos, reduced solar production and kWh performance warr...

[Keith Cronin]

Friends

Having had some experience in this genre, after selling my company to SunEdison in '07, here are my takeaways.

1. The financing community want assurances. My hunch is their expectations or what they were sold compared to what the production is, could be falling short.
2. Risk management- pushing the risk to the integrator, leverages their returns. Assignment of this responsibility, kWH harvest is hard to quantify.
3. The factor- PVWatts- .77; .82- perhaps the .77 is more conservative- over time. The amalgamation of 25 or so years of production is hard to extrapolate. Another function of risk. Who is being relegated to take the risk, is a negotiable piece of the relationship.

Overall, the way wrenches can make some more $ and have a long term relationship with their clients, is having a maintenance-recurring revenue aspect to their business models. This is were you could articulate this. If you are being asked to provide warranties/assurances, build it into the deal. X cents per kW, for the system install, etc. Yes, enjoy the upside to your favor, since they are asking you to share the downside. Some years, the weather will be fantastic and hence increased production, some years, Iceland will have erupting volcanoes.

To me, the performance based model needs to come out of our industry and we need to wean ourselves from tax credits, buy downs etc and go FIT. This includes full blown maintenance agreements on systems we have deployed, to ensure the tax payers who have subsidized these systems at the federal and state level are getting a good return on their investment as well. It makes me wonder how many systems that have been grid tied over the last 10 years are still fully optimized and working to spec? I surmise alot of connectors have come loose, trees have grown, dirt has accumulated, etc., to suggest a degradation of performance.

If we are seeking energy independence, we need to have a digital dashboard to manage the systems efficacy.



________________________________
From: "SOLARPRO at aol.com" <SOLARPRO at aol.com>
To: re-wrenches at lists.re-wrenches.org
Sent: Mon, April 26, 2010 4:57:49 AM
Subject: Re: [RE-wrenches] Volcanos, reduced solar production and kWh performance warr...

Marco:
 
At what point (kW or cost) does a weather station with online monitoring 
make sense?  
What (or who ) defines "normal weather?"
Defining expectations for the large (> 1M) installations must 
be particularly vexing - what constitutes normal or expected downtime due 
to mechanical failure becomes key to structuring PPA's.
If making a warranty on kWh production must be part of a contract, a 
number of concerns must be tackled in the way it is written, especially with 
regard to the value of compensation.  Maybe funds could be awarded for over production or applied as a credit against lower than expected 
kWh. 
 
Pat Redgate
Ameco
 
In a message dated 4/26/2010 4:38:43 A.M. Pacific Daylight Time, 
solar1online at charter.net writes:
 
>Hi Marco,
> 
>I hope this query does not divert response to 
>  your original question.
> 
>How is the situation of the reduced performance 
>  due to the volcano (or other "acts of God" or the like) approached 
>  in the Power Purchase contract? Perhaps this could be titled "Reduced Solar 
>  Production As a Result of Reduced Solar Input". 
> 
>TIA,
> 
>Bill Loesch
>Solar 1 - Saint Louis 
>  Solar
>
>PS As I remember, the last time I bought a new 
>  vehicle, back in the Dark Ages, the auto manufacturer's warranty deferred to 
>  the tire maker's warranty (for tires), etc. Any similarity? 
> 
> 
>----- Original Message ----- 
>>From: Marco 
>>    Mangelsdorf 
>>To: 'RE-wrenches' 
>>Sent: Sunday, April 25, 2010 10:02 
>>    PM
>>Subject: [RE-wrenches] Volcanos,reduced 
>>    solar production and kWh performance warranties
>>
>>
>>This thread brings up a very 
>>    timely issue that I’m dealing with right now with PV Power Purchase 
>>    Providers.  As an integrator providing turnkey PV systems of X kW, I’m 
>>    being asked to contractually agree to a minimum performance warranty for 
>>    said PV systems.  I am EXTREMELY uncomfortable to any such clause in 
>>    any contract that I would sign.  I have strong confidence in my PV 
>>    design capabilities  and engineering support and in my professional 
>>    crew to install a top-quality PV system.  I have a lot less confidence 
>>    in an inverter manufacturer being able to get to a site on a Hawaiian island 
>>    in the middle of the Pacific in a super timely fashion as the lost PV kWhs 
>>    rack up.  And as I mentioned in a previous post today, we have an 
>>    active volcano here that’s been spewing since 1983, a volcano that could get 
>>    a lot worse on any given day.  I’m leaning strongly against agreeing to 
>>    any such clause.  Way too bad a precedent to set.  Way too much of 
>>    a liability.
>> 
>>Anyone else had to deal with 
>>    this bugger of a performance warranty demand?
>> 
>>Thanks,
>>marco
>>ProVision 
>>    Solar
>> 
>>Marco:
>> 
>>Our 
>>    production schedule has been in 
>>    tatters - lowered by perhaps 30% because of the rain.... can't plan, can't 
>>    do.  Then I pay overtime on good days to (try to) catch up.
>>We 
>>    have a number of systems online and I had not thought to actually review and 
>>    compare from this year to last.  I'll let ya know.
>> 
>>We'll 
>>    get a call like - "My bill is higher than last year (edison has a bar 
>>    graph of monthly consumption for the past 13 months) and I'd like you to 
>>    look at my system" or My meter is not going backwards, should I call 
>>    edison?"  The weather is so consistently wet this 
>>    winter (think Hilo) that we usually just need to ask-
>>"Been 
>>    outside lately?"
>> 
>>But 
>>    everywhere is so green and the desert bloom is 
>>    outrageous.........
>>http://www.desertusa.com/wildflo/ca.html 
>> 
>>Pat 
>>    Redgate 
>>Ameco 
>>    Solar 
>> 
>>In 
>>    a message dated 4/25/2010 12:24:53 P.M. Pacific Daylight Time, 
>>    marco at pvthawaii.com writes:
>>Pat,
>>> 
>>>Kicked 
>>>      your butts as far as lower output?  If so, by how much on a 
>>>      percentage basis?
>>> 
>>>On 
>>>      the Big Island of Hawaii, we’ve had a very active volcano doing its thing 
>>>      since 1983.  With the normal trade winds, the vog (volcanic smoke + 
>>>      fog) gets blown south past the volcano, around the south tip of the island 
>>>      and then back up along the west side of the island.  
>>>      Which means that Kona-side residents can be in a yucky vog zone for days 
>>>      and sometimes longer.  Think L.A. on a smoggy summer day.  And 
>>>      as far as percentage decrease in solar output, I really have little 
>>>      accurate clue.
>>> 
>>>Marco
>>>ProVision 
>>>      Solar
>>> 
>>>Kicked 
>>>      out butts, in fact.
>>> 
>>>Pat 
>>>      Redgate
>>>Ameco 
>>>      Solar
>>>  
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