Own or Contract Solar Power Plants? Utilities Need to Decide

Operations and Maintenance Costs are Part of the Decision 

Utility scale solar photovoltaic (PV) sites have a cost, and I'm not talking about the energy.
 

Sure, a utility could rely on a third party power purchase agreement (PPA) as it formerly did. But as they contemplate ownership of both central and distrib¬uted solar-based generation, they now must consider system performance, reliability, and asset management priorities.

The issue has drawn attention to require a closer look.

To that end, the industry's research arm, the Electric Power Research Institute (EPRI), has released a white paper on the growing trend.  "Addressing Solar Photovoltaic Operations and Maintenance Challenges - A Survey of Current Knowledge and Practices" looks at what goes into this decision and how utilities are coping with the challenge.

"In short, PV asset ownership shifts the financial onus onto utilities," the report says.

I recently spoke to the point man involved in the creation of the report, Nadav Enbar, senior project manager for distributed renewables, power delivery and utilization.

"The fundamental rationale behind this report is that PV is growing and we are not moving back in time," he said. "As we look historically at the growth of conventional generation sources, we're seeing order-of-magnitude growth, with a similar trajectory for solar photovoltaic power right now."

Although state renewable portfolio standards are playing a part, some utilities are making a deliberate decision to add additional PV, Enbar said.

"The idea is that utilities are spending more on the technology whether they are mandated or not .and many are choosing to bring the assets under their own umbrella," he said.

The choice is pretty basic, but one which was easier to make when PV was a tiny part of the power generation system: a PPA offers lower up-front costs as electricity is bought from outside the organization but more expensive over the 15- or 20-year life of the contract. Some utilities are now favoring the longer view and incorporating the assets into their portfolios.

That decision entails another set of costs. "Utilities have to pay attention to the upkeep and maintenance of their assets base to bring the greatest amount of value in terms of electricity production but also to maintain a level of reliability," Enbar added.

Those expenses can range generally from1 percent to 5 percent of the all-in installation costs.

One utility that has gone this route is Southern California Edison, which started out by sending out its O&M but has now decided to bring it in-house. The scale of its commitment to PV made the decision a little easier. In 2008 announced its intention to own 500 megawatts. That in itself will support 23 full time employees.

A hybrid option is also starting to emerge in which the utility that is adding PV gears up its O&M by first outsourcing its functions for a couple of years while it gets its own staff trained from the third party it has hired. It can then transition its operations and maintenance to eventually becoming a utility function.

But there does not seem to be typical tipping point when the utility makes a decision to bring PV O&M in-house. Local conditions seem to be the determining factors: travel distances to sites, climate and season, ground versus rooftop systems, and even when the best time might be to roll a truck.

There's also the power market coming into play. Enbar said scheduling panel cleaning can be done just before the peak solar energy season to take advantage of the increased generation capacity.

In other words, the reasons are all over the map.

Article by Bill Opalka, RenewablesBiz