As we enter a new year in the renewables industry, we can expect to see a few key emerging trends that will affect current or future renewable assets owners. Here are our thoughts on a few of the more prominent trends and how they might shape client portfolios in 2017.
APM Trend #1: O&M Cost Pressures and Impacts on Solar Projects
Manufacturer competition and a series of convergent trends have pushed solar equipment prices down to historical lows. This has resulted in greater price pressure by facility owners and operators to reduce costs along the O&M chain, including the cost of operations and maintenance (O&M) services.
While some in the industry may view solar components as commodities, O&M services are not something that can easily be commoditized. Ensuring facility production is optimized requires highly trained professionals to maintain, operate and repair solar assets, but more importantly, to proactively spot disruptive energy production problems and accurately apply solutions to minimize truck rolls and multiple site visits. Nevertheless, O&M cost pressure is a reality, and Bay 4 Energy’s managers are working diligently to reduce the costs of our O&M services while also optimizing cost efficiencies for our customers.
Our Asset Performance Management (APM) team makes sure that any solar facility developed or acquired by our owners is designed and engineered with high-quality components and sound construction techniques necessary to last their full expected lifecycle. A properly designed and built project that has been vetted by Bay4 Energy’s technical experts and our proprietary software will benefit from lower down-time, increased production, and reduced O&M costs over the 20–30 years of the system’s life – maintaining excellent optimal solar production.
Utilizing our proprietary software and remote diagnostic systems that analyze power generation data from each facility, potential issues are assessed and corrected remotely, eliminating the need for an onsite crew. When a service crew is required, we assess the long-term overall operating costs of immediately fixing the issue or waiting until the next scheduled maintenance, thus reducing potential owner O&M costs and minimizing the impact on profit margins.
APM Trend #2: Energy Storage Is Here
In terms of technology, we’ve already mentioned that APM is utilizing more sophisticated software for remote control monitoring, repair and maintenance. But there’s another big tech trend appearing in the designs of new 2017 projects: energy storage. Not only are we seeing more energy storage paired with solar for peak shaving and other cost reduction applications, but we are also maintaining stand-alone battery storage systems.
Large-scale energy storage is a relatively new trend with limited field experience and performance data. This is especially true with the novel types of storage being introduced into the market, such as different lithium-ion chemistries, flow battery, and compressed air technologies.
To ensure that our clients get the maximum benefits from energy storage, Bay4 Energy utilizes our in-house storage testing facilities and storage experts to evaluate new technologies and the long-term benefits and costs. In addition to understanding and assessing new storage solutions (and their companion software), we evaluate the companies behind these new products and their long-term viability.
The bottom line is that while the relative newness of battery storage has risks for project owners, it also has economic benefits, especially when combined with new government or utility incentives. With proper testing, warranty quality assessment, and the right deployment applications, energy storage can provide a significant benefit to renewable asset portfolios.
APM Trend #3: Preparing for Regulatory Changes Under the New Administration
We understand that solar asset owners may feel some confusion about the direction of renewable energy regulations with the incoming administration. While there is no way to provide regulatory certainty, we can assure project owners that Bay4 Energy’s asset management team will continue to monitor regulatory changes that may affect new and future project profitability.
However, since permitting regulations are usually more local, we do not anticipate many direct effects on current or future solar projects under the new administration. In fact, recent cabinet nominee picks have signaled that the administration would prefer to streamline regulations. This may benefit the renewable energy project environmental reporting requirements or streamline tax reporting and benefits. With in-house tax, legal and financial experts, we are well prepared to advise and update customers on any new regulatory changes that affect renewable energy facilities.
Administrations may come and go, but with Bay4 Energy’s more than 30 years of asset management experience, you can be assured that we will continue working for our clients to manage solar projects efficiently and maximize solar asset profitability for owners, improving our world’s renewable energy future.
On behalf of the Bay4 Energy team, we wish everyone a happy, healthy and profitable 2017.
Dennis W. Odden, President, Bay4 Energy Services, LLC
William Richardson, President, Bay4 Technical Services, LLC