Five tips to boost returns on solar PV

Sensemaking / Five tips to boost returns on solar PV

Solar PV is energy efficient, but financial efficiency depends on good management, argues Ian Rose of PassivSystems.

By Futures Centre / 30 Jan 2014

The UK solar market has been on a rollercoaster ride in recent years, with fluctuating government incentive levels driving large peaks and troughs in both consumer and professional investor demand. However, the underlying trend of late has been steady growth, with the UK industry now one of the most active markets in Europe.

Over 1GW of capacity has been installed in the last 2 years – it currently accounts for 12% of renewable electricity capacity in the UK and 2.9% of renewable electricity generation, the majority of which is used in domestic applications. In fact, the UK is set to become the largest solar market in Europe during the first quarter of 2014, according to data from NPD Solarbuzz. And solar PV also remains a core component of government policy, as part of the UK Renewable Energy Roadmap.

All this means that despite some well-documented challenges, the UK solar industry remains an attractive investment opportunity. Portfolio owners have successfully driven improvements into the supply chain, and operation and maintenance contracts have become more sophisticated in how they assure performance is maintained.

But while solar PV is certainly energy efficient, in order for it to be truly financially efficient systems must be properly monitored and managed. A poorly managed solar PV system is likely to drift towards the lower quartile of performing systems, which, based on our sample of monitored systems, suggests that consumers will be losing hundreds if not thousands of pounds over the lifetime of the asset.

Falling Feed in Tarriff (FiT) rates mean today's solar PV dealmakers (banks, investors, developers, social landlords, etc.) are also demanding maximised yields from their solar investments. As they push for Lowest Levelised Cost of Energy (LCOE), for example, some investors are seeking new ways to guarantee their returns and increase the on-going ROI. Performance monitoring and maintenance play a key part here.

Numerous academic studies have already investigated the performance of panels in the field. These have tended to focus on the ability of the technology to deliver against forecast performance, but PassivSystems decided to compare actual performance with the theory reported by these studies. We looked at 42 portfolios of homes and around 16,000 monitored systems, generating data at intervals of 30-minutes for the majority of homes, and one-minute for those monitored over broadband. We also have Micro Certification Scheme (MCS) and equipment data for all monitored installations.

These data sets, along with geographically aligned historical weather station irradiance data, let us analyse the performance of our portfolios against a range of different criteria, and compare it to the MCS anticipated yield (measured as the percentage over/under performance).
For example, we recently looked at how the installation, maintenance and monitoring activities influence the performance of our portfolios, and found it can vary by as much as 35% between them. On a system designed to generate £800 a year that works out as an efficiency range of £280 per annum. 

In fact, we’ve found that 50% of portfolios are failing to deliver the MCS forecast yield, reducing the anticipated return from the FiT. The six primary causes of system losses are: shading, inverter outages, inverter dropouts, inverter threshold, module rating and Maximum Powerpoint Tracking. We’ve also identified a number of additional reasons including: residual current devices (RCD) can trip,  and this can go unnoticed for many days or weeks; the tenant can inadvertently disconnect the system by use of an isolator switch; pay-as-you-go meters can cut out generation; and then there’s poor or incorrect wiring during installation.

This highlights how human interaction with the PV system, whether from interference or failure to monitor its status, can result in a significant impact on the levels of generation achieved. But if under-performance is measured and properly understood, steps can be taken to counteract it. This may be through improved installation practices, altered maintenance regimes or better education and support of the householder.

A good monitoring and support service is shown to have a real impact on portfolio returns: our analysis also shows that well owner managed PV installations perform within the upper quartile (+6 to +17% above the MCS benchmark). So these are not ‘fit and forget’ assets, but one’s prone to a range of technical, human and environmental factors that can influence performance and the rate of return. To fully optimise the lucrative nature of solar PV portfolios, both from an environmental and financial point of view, domestic installations must therefore be well managed and maintained.

With that in mind, here are PassivSystem’s top five recommendations for maintaining residential solar PV systems and maximising their investment potential:

1. Ensure that monitoring is considered as a strategic requirement when planning a Solar PV investment. A good monitoring company can help advise on best practice and on procedures to ensure success; the service should include proactive alerting so problems are notified early.

2. Separate monitoring from ongoing operations and maintenance servicing in contracts to ensure that an independent measure of performance is captured.

3. Build appropriate service level agreements into operations and maintenance contracts, based on the ability of the monitoring service to provide performance data and information on the speed of fault resolution.

4. Ensure that the monitoring service can provide an assessment of panel performance broken down into different contractors, hardware components, housing types and locations, to provide the fullest insight into how these factors influence the level of return.

5. Work closely with your monitoring service provider to ensure that the service you procure can deliver the information required to support a proactive maintenance regime.

Ian Rose is Professional Services Director at PassivSystems, an award winning company that designs, supplies, installs and supports integrated smart home systems.

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