Inverter failure and auction prevalence pressuring solar O&M costs, report finds

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on reddit
Reddit
Share on email
Email
Image: Lightsource BP.

Inverter failures and the prevalence of auction-based mechanisms for large-scale solar projects are placing pressure on solar operations and maintenance (O&M) prices, a new report from Wood Mackenzie has found.

New research compiled by the analysis firm suggests that solar’s aging fleet will present numerous challenges to O&M, a factor which will be further compounded by project auctions placing further pressure on costs as developers look to save on project OpEx.

Wood Mackenzie forecasts that solar assets running into premature failures will rise from ~4.2GWdc this year to 36GWdc by 2025 as a growing number of plants pass ten years of operational life. Around 100GWdc of operational solar will be more than ten years’ old by 2025, Wood Mackenzie has found.

By that time, nearly 227GWdc of solar systems will be approaching inverter end of life, representing a significant opportunity for those either repowering or maintaining projects moving forward.

But O&M prices are set for additional pressure owing to the widescale adoption of auctions driving the levelised cost of electricity (LCOE) down which, in turn, will place greater emphasis on price-based competition in the O&M sector, as principal analyst Daniel Liu explained.

“Developers and asset owners are exploring methods along the value chain to reduce overall costs, assuming more risk. In the O&M sector, this will happen through partnerships with different players oriented to a hybrid structure,” Liu said.

Such pressure could lead to certain works – panel cleaning, corrective maintenance and landscape management – being omitted from contracts as asset owners pursue an “a-la-carte service structure” rather than all-in service contracts.

Accelerated consolidation

Meanwhile, Wood Mackenzie’s report also paints a picture of a global O&M market that continues to consolidate. According to the research firm’s analysis, the top 15 vendors increased their market share from just over half (51%) to 54% last year, with Spain’s growing solar market experiencing the most significant consolidation. At the end of last year, the top five O&M providers in the country held 71% of the market, up 9% year-on-year.

Only Germany, the UK, the US and France witnessed no real consolidation, the analysis shows.

And this trend looks set to continue, with vendors listed in places 16 – 30 experience lower growth rates than the top 15, indicating that the leading players are increasing their hold on the market.

Read Next

May 6, 2021
Independent power producer has Opdenergy has postponed an initial public offering (IPO) just days before its shares were due to start trading on the Spanish stock exchanges.
May 5, 2021
New solar and wind assets in the US are now cheaper to operate than nearly 80% of existing coal-fired generators in the country and could replace the asset class while delivering numerous benefits to consumers, a report has found.
May 4, 2021
Spanish renewables developer and independent power producer (IPP) Grupo Ecoener has seen its shares slide on its market debut today.
April 28, 2021
FTC Solar has downgraded the pricing of its initial public offering (IPO) and will list at a price of US$13 per share, rather than initial target range of US$18 – 20.
PV Tech Premium
April 26, 2021
LONGi’s ascent to the top of the solar module shipments league table captured headlines last week, but it also cements the view that consolidation in the sector is inevitable, with an oligarchy of majors dominating market share. Carrie Xiao assesses the prospects of those top five companies as 2021 heats up.
April 15, 2021
Israeli developer Solegreen has invested US$104 million in solar installer Kuubix to help it pursue an "aggressive" expansion strategy across its core markets in the US.

Subscribe to Newsletter

Upcoming Events

Solar Media Events
May 11, 2021
Upcoming Webinars
May 26, 2021
Session 1 - 7:00 AM (BST) | Session 2 - 5:00 PM (BST)
Solar Media Events
June 15, 2021
Solar Media Events
July 6, 2021