Scaling and Streamlining Solar Business Growth: Page 2 of 6
Inside this Article
Borrego Solar is not a manufacturer. We need to source modules, inverters, racking, combiner boxes and data-acquisition system equipment for our projects. We use a cross-departmental product approval process to expand our product mix over time. This process allows us to sort through commercially available products and identify those that fill a gap in our offerings, address a changing code requirement or provide a better value for our customers while meeting our standards for quality. As part of this process, our engineering and operation teams work closely with our partners and prospective vendors to highlight and push for value-added features within these products.
To combat an increased risk of error on the project level in both design and execution, we have created and implemented design standards, a design review process and an engineering site inspection process. We have also identified our preferred set of design applications. Design and applications engineers use these standards and guidelines to quickly develop and iterate designs, while controlling and maintaining high standards for quality set by our professional engineers.
Several software platforms are key to our operational improvements. HelioScope (helioscope.com) allows us to quickly generate preliminary production models and designs. We use Helios 3D (helios3d.com) in conjunction with other CAD software to develop our plan sets. PVsyst (pvsyst.com) generates our final production models. Bluebeam (bluebeam.com) supports our design review collaborations. We use Smartsheet (smartsheet.com) to coordinate the release of plan sets, schedule design reviews or site inspections, and otherwise manage collaborations and workflow. Over time, we have set up and refined internal procedures and standards around these software tools.
Standardizing our designs and the tools we use has also been beneficial for our outside partners. When we need to use third-party engineering services, we can control for quality and ensure that there aren’t disparities between in-house and third-party designs. This allows us to scale when demand swells. Given the dynamic nature of project schedules, we want to keep everyone’s schedule aligned. Therefore, we are starting to use Smartsheet to share our project schedules with subcontractors in real time. Our investors also appreciate that our design and production modeling process is transparent and consistent, as this gives them confidence in their projected returns.
One issue we have found with our model of acting as the EPC firm and hiring subcontractors is a lag in incorporating labor savings into bids. Manufacturers are value-engineering their products to reduce the overall installed cost. In some cases, this means they add features that reduce field labor by speeding up installation. Despite these changes, and our value-engineering efforts in design, we find that most electrical subcontractors rely heavily on past performance when bidding and use dollars per watt as the metric for measuring their bid. We have had some success reducing field labor costs by taking time to meet with prospective estimators, foremen and project managers as part of the subcontractor bid process. We let these stakeholders review our designs, call out product changes and discuss revised design standards; we also point out certain installation items that might scale based on dollars per module rather than dollars per watt.
In some cases, we have tried shifting work from electrical subcontractors to our racking vendors to capture potential savings associated with new products. Where labor rules allow nonelectricians to build mounting systems and hang modules, racking vendors can provide their own crews and laborers to perform this work. Where the rules require electricians, racking vendors can take on the task of hiring electrical subcontractors to perform the work and meet the predicted installation timelines. In some cases, racking manufacturers have had success installing their own products per our contractual expectations. In other cases, they have significantly underestimated the difficulty of the work, and we have had to rely on our master subcontract agreement to insulate us from their cost overruns.
VNEM and Community Solar
The advent of virtual or remote net metering and community solar is a welcome contrast to declining incentives. These programs allow us to optimize projects, host customers and owners by siting projects in locations that result in the most favorable rates and overall economics. It requires many different skill sets to identify host sites and off-takers, to understand and communicate the value proposition, and to negotiate terms.
To address the challenge of working with three different customers—project owner, host and off-taker—we have compartmentalized who takes the lead in each of the transactions. For example, some project developers exclusively look for sites, while others look for off-takers. As our team has gained experience and we have refined our processes, our project developers have become proficient in handling these three customers and their associated transactions. We have also established a vetted group of affiliates and partners who bring us sites and off-takers.
Since working through EPC and O&M contracts is a significant legal investment, we have focused on building out the relevant teams to strengthen relationships and foster expertise. Our project finance group manages relationships with the investment community and negotiates the EPC and O&M contracts. Our finance group focuses on the owners to understand the way they model project risk and returns, as well as establishes the personal relationships it sometimes takes to get deals done. Meeting our contract obligations and delivering a quality product allows us to leverage that investment and transact again with the same buyer.
As we move forward in 2017 and continue to scale our business, we are continuing to analyze our performance, modify our value stream maps and find ways to reduce costs. In our development work, we are identifying areas where we can obtain site discovery without running a considerable risk of overspending. In engineering, we are working to reduce our process and lead times for generating plan sets. In operations, we are trying out a model with some of our trusted electrical subcontractors in which we award the project early and work collaboratively to incorporate their constructability feedback into our design. Our hope is to design easier-to-build systems and reduce the contingencies that our subcontractors carry in their bids by folding them into the planning process. Across the organization, we are focused on driving down our cost per first-year megawatt hour.
While our maps, processes and software provide a foundation for our business and help us quickly meet changing market dynamics, these systems remain works in progress. At the end of the day, it is people who apply these tools and principles. We are successful because our employees strive to meet policy-driven deadlines, improve continuously, deliver a quality product and accelerate the adoption of renewable energy.