You can get a good deal on solar photovoltaic panels from that bloke down the pub, and you know a sunny site where you can stick them. And you can always sell cheap electricity.
What could go wrong? In reality, the list of potential problems and risks to profits is long and could be daunting.
For example: hail could break the photovoltaic (PV) cell glass; rodents could damage cables; use of the wrong clamps could damage modules; failure of bypass diodes or junction boxes could cause cell overheating or reduced output; battery inverters could fail or be knocked out by flooding; modules could be vandalised or stolen; the power market could change; or the government could cut its subsidies. And that's before someone puts up an adjacent building that blocks out the sun.
"Numerous factors could negatively influence the operation of a PV plant and could lead to a reduction in output or, in the worst case, to complete yield losses," says Solare Datensysteme (SDS) of Germany, which produces the PV monitoring system Solar-Log. "The failure of one or several inverters, cable damage, errors during installation, or reductions from one or several modules due to dirt and grime are only just a few examples."
SDS claims that in many cases monitoring systems have not been used well: "The control of operation data left much to be desired in most cases."
The rapidly growing PV sector has little long-term performance history on which to base risk and cost assessments. Operators and component manufacturers tend to keep performance data secret, although the Solar Bankability project funded by the European Union's Horizon 2020 programme says that operating expenses are about €65-75/MWh/year, or €60-80/kW/year, with insurance at €4-6/kW/year.
Yet investors, lenders and insurers assess differently the impact and probability of risks, and the effect of mitigation measures, depending on their investment aims. For example, investors want long warranties, performance guarantees, low capital and operating costs, high long-term performance and long lifetimes. Insurers want regular maintenance. Engineering, procurement and construction contractors want short warranties, minimum extra guarantees and low operating costs.
Also, purely financial investors usually want maximum profit. Strategic investors such as utilities might trade profit against the inclusion of renewable energy in their portfolios. Retail investors have mixed aims, with home-owners perhaps opting for environmental aims and self-reliance rather than, or besides, profitability.
Huge investments in renewable energy are needed in response to the worldwide push to tackle climate change. "New investors and sources of financing are needed to deploy these relatively immature technologies on a larger scale," says the reinsurer Swiss Re. "Sound risk management is needed to attract the necessary capital."
Cautious institutional investors such as pension funds and insurers will demand "de-risking the cash-flow volatility of renewable energy assets," says Swiss Re. It adds that insurance could reduce risk/return levels close to those of the bonds favoured by institutional investors.
And as renewables become cheaper – PV system costs have fallen by more than 70% since 2008 – governments are likely to reduce their support, such as capital subsidies, feed-in-tariffs, tax credits and tradeable green electricity certificates. "Generators will likely be exposed to greater electricity market risk," says Swiss Re.
In response, Solar Bankability has been developing a common approach to PV project risk assessment, including a framework for calculating planning uncertainties and what it says is the first commercial risk modelling tool. Its methodology is intended to allow estimation of the economic impact of failures on the levelised cost of electricity and on PV business models. It used a cost-based approach, with a cost priority number coefficient assigned to every risk for the assessment of the failure.
By its end next month, the project will have analysed the technical and other failure statistics of more than 700 PV plants with a total power rating of 420MWp and 2.4 million components, including 2 million PV modules and 12,000 electrical inverters. It based repair and maintenance costs on more than 3,500 insurance claims around Europe.
Determining the costs of failures and of mitigation measures should ease project funding, believes Solar Bankability, which considered four types of PV systems: residential (10kWp or below), commercial (10-250kWp), industrial (250-1,000kWp) and utility scale (above 1,000kWp).
Plant problems can be myriad, including during product testing and development; plant planning; installation and transport; operation and maintenance (O&M); and decommissioning. "All these risks should be clearly defined," says Solar Bankability's Ulrike Jahn, of TÜV Rheinland Energy. "You can save a lot of money if you apply the right mitigation measures." Mitigation could typically cut costs to euro 90/kW/year from euro 104/kW/year, he says.
Mauricio Richter, of Belgian consultancy and software firm 3E, also a Solar Bankability partner, says that the best combination of mitigation measures could improve the levelised cost of electricity by 4%.
For PV modules, the researchers say that the dominant risks include glass breakage, potential-induced degradation and "improper" installation such as mishandling, damage to frames and wrong clamping. The cost of substitution is more important than the cost of lost output; repairs are not always possible and could invalidate module manufacturers' warranties, so replacements are usually preferred.
Most PV system failures are related to inverters, which need to be replaced or repaired at least once during a project’s life. Integrated circuits and optical components typically have 10-year lives, says Solar Bankability, whereas module manufacturers usually offer 20- to 25-year warranties, with a guarantee of 80% efficiency in the final year.
High thermal and electrical stresses tend to be the causes of electronic components such as bus capacitors, switches and printed circuit boards giving up the ghost.
In micro-inverters, daily temperature cycling means more stress on components. Utility-scale PV plants have about 3,500 micro-inverters/MW (far more than standard inverters), posing a high failure risk and O&M challenges, says Solar Bankability.
With cabling, bad installation and the use of different types of connectors are high risks. "Broken cable ties, most likely due to poor quality choice during the planning phase, are among the most common failures," adds Solar Bankability.
Other sensitive parts include sun tracking systems, data acquisition systems, medium- and low-voltage cabinets and transformers. Failure of a medium-voltage transformer because of soiling can mean a large loss of output as sourcing and fitting a replacement can be difficult and lengthy.
A 2016 study shows that the costs of correcting PV project defects increase exponentially by a factor of 10 at each step, from the initial product idea to the handover to the customer. So preventing defects during design and planning, typically through component testing and qualification, along with design reviews, reduces expensive operating failures and mitigation costs, says Solar Bankability.
It adds that a qualified/certified contractor able to prove its expertise should be chosen, including for residential and small PV systems. The firm has to match components to parameters such as location, humidity and altitude, and might need load-profile knowledge to handle self-consumption of the output power or power purchase agreements.
For urban sites, factors to be considered include shading and accessibility of roofs or facades, although on large PV arrays rows of modules can be shaded by adjacent rows, for example. Solar Bankability says that shading can be modelled with high certainty, but that the overall effect on an array is more difficult to model: "This depends, for example, on the configuration of the PV modules within the array and on the number and configuration of bypass diodes in the modules."
Although PV plants, with few moving parts, require less maintenance and servicing than conventional power generation, poor O&M could turn profit into loss.
Even cleaning, to maintain power output, can be a firm requirement. "Some manufacturers and installation companies have made solar panel cleaning a condition of their warranty," says the UK firm Clean Solar Solutions. "We frequently see sizeable increases of solar efficiency on agricultural sites, of up to 30%. On industrial and commercial sites, we have seen increases of up to 60% and on residential arrays of up to 21%."
O&M was the poor relation to construction in the early days of solar projects. "There was no clear perception of the value and importance of O&M, not only from the investors and lenders, but also on the part of the contractors themselves," according to Vassilis Papaeconomou, managing director of Italian O&M firm Alectris and head of the O&M task force of the SolarPower Europe trade association. "O&M was considered as a 'checkbox' to achieve financing and was initially perceived as a burden by the contractors, a pure cost centre for the owners and a formal necessity from the lenders."
However, he sees a change: "PV plants constructed in the beginning are getting older and the lack of maintenance and/or quality design and construction are becoming evident. Such adverse effects are heavily impacting the generated revenues of solar assets and creating a lot of headaches for investors and lenders."
The move from feed-in tariff schemes to tender-based renewable electricity markets, with cut-throat pricing competition, makes O&M more pressing, says Papaeconomou. Despite market changes including new firms and takeovers, he thinks O&M is often misunderstood: "The market still lacks a significant track record, even in the older markets in Europe, let alone in emerging solar markets such as Africa, India and even Japan."
However, SolarPower Europe recently issued best-practice O&M guidelines, with definitions and critical operational and maintenance activity schedules as well as coverage of activities such as claims management, training and health and safety.