The PV Asset Management and O&M Europe 2017 conference, has demonstrated that the O&M business has more than ever become a matter for specialists in a market environment dominated by falling module prices and a fierce competition. Discussions on day one of the event considered this and other themes, and was skillfully moderated by Edmee Kelsey, the CEO of German wind and solar asset management company 3megawatt,
According to a virtual poll conducted at the beginning of the event, around 75% of the participants believes that the solar O&M sector will see a further consolidation in the near future. A similar number, 74%, indicated that managing larger portfolios will help O&M service providers rationalize and simplify their business, as the number of complexities in terms of financial, technical, geographical and cultural terms continues to increase.
Pressure on solar module prices is forcing the entire PV supply chain to constantly readjust strategies, and the O&M sector is no exception. According to another virtual poll held at the meeting around 43% of the participants expect that prices for O&M services will drop by more than 20% over the next three years. Another 43% voted that they believe prices will decline by at least 10%. The remainder, optimistically, voted that they are confident that O&M pricing will stabilize or even increase.
The CEO of UK company Primrose Solar, Giles Clark, was the first in stressing the importance of getting to scale (which also means scale in capital) in the business, although he also highlighted other challenges and how best practices in the current market phase are a moving target.
Representatives of a few European utilities such as France’s EDF, Italy’s Enel and Portugal’s EDP were also present at the event for the first time, thus showing that the business is also drawing the attention of all major energy market players, all of which are interested in maximizing their investment yield.
Fabrice Tencaramadon, which is the international project manager of EDF’s renewable energy unit EDF Energies Nouvelles, explained that only involving the O&M services provider in the construction phase will create the conditions under which an easily-operable asset will be delivered. Only these providers, Tencaramadon added, can identify and anticipate issues that are usually not taken into account in the construction phase.
Tobias Bittkau, global head of operations services from German renewable energy company Baywa RE stressed on the other hand the urgency of creating certified international solar O&M standards. “We need standards to get more efficient,” Bittkau specified in his presentation. An example of this lack of standardization can be seen, according to him, in the O&M contracts for large-scale solar plants, which can be three or even 400 pages long.
Andreas Leimbach, the managing director of Germany-based Encome Energy Performance GmbH, said he also expects a further consolidation, professionalization and industrialization of the O&M business and that, however, O&M prices will not fall but will even increase, as PV asset managers interested in maximizing profits will have to turn to highly specialized O&M providers. Leimbach also warned that getting to scale may not be the only answer, and that only O&M providers that act like asset owners and are detail-oriented may be able to get through the upcoming consolidation phase.
Jordi Francesch, the head of asset management of Glenmont Partners, said that the time in which EPC providers were offering O&M services is now finally coming to an end, thus resolving this inherent conflict of interest – O&M services providers are also expected to give a critical insight into project planning and the work done by the project’s constructor. Francesh also recognized that O&M providers are currently offering very aggressive prices, but he also warned that price may not be the main driver, as other considerations such as liabilities, warranties, equipment, termination term and payment conditions, extent of subcontracting and location and experience of staff must be taken into account to make a strong business case.
Stefano Salerno, the COO of Amaranto Global Asset Manager, stressed the importance of cyber security for PV plant owners. He showed how dangerous cyber-attacks can be and how easily sensitive data can be stolen from a renewable energy asset. An attack may even trigger an explosion to the plant’s components, potentially injuries employees working at the plant, said Salerno in his speech. Other issues may also be economic loss, erasing of historical data and consuming bandwidth, which increases the opex of the PV project.
What day one of the PV Asset Management and O&M Europe 2017 conference has showed, after all, is that doing business in this market environment remains challenging – in much the same way as it is in the rest of the PV supply chain. Despite this, however, the opportunities in the growing sector will continue to increase considerably.