Designing for Value in Large-Scale PV Systems: Page 4 of 4
Inside this Article
Consider a 100-acre piece of land in the desert Southwest that a developer has permitted for a solar project. A request for proposal (RFP) goes to the EPCs, asking for design options for the PV system up to the medium-voltage connection point at the substation. The developer will issue a separate contract for the substation and interconnection work. Should the EPCs propose a fixed-tilt system or a tracker?
At today’s prices and module efficiencies, a tracker in areas of high direct irradiance almost always has a lower LCOE, meaning it generates energy more cost efficiently than does a fixed-tilt system. In short, this is because for systems of equal capacity, a tracker produces at least 20% more energy than a fixed-tilt system, but costs far less than 20% more to build. However, if you dig a little deeper—as illustrated in Table 2—you see that the LCOE model fails to account for the marginal value of additional revenue these systems generate. On 100 acres of flat land, you might be able to fit 23 MWp on a tracker versus 37 MWp using a fixed-tilt system. Even though the production efficiency (kWh/kWp) and cost efficiency ($/annual kWh) for the fixed-tilt installation are not as good as for the tracker, fitting more capacity on that piece of land yields more total energy.
From the developer’s perspective, additional energy—and added revenue, by extension—is crucial to offsetting the high fixed costs of the overall project. Remember, the developer has already sunk a lot of money into the land, environmental reviews, interconnection studies, substation and other development costs, which an EPC’s LCOE models often do not consider. Even if it does consider those costs, the LCOE approach searches for only the most cost-efficient generation option. Instead, developers search for the option that generates the highest investment returns—usually represented as the best IRR or highest NPV—as opposed to merely the lowest LCOE. EPCs and design firms that understand how these investment models work do better in competitive bidding situations than those relying on LCOE models.
Row spacing and tilt angle. Assuming you have determined that a fixed-tilt system is optimal for a particular project and that a high dc-to-ac ratio will yield better economic performance, what can you do regarding row spacing and tilt angle? For purposes of constructability and O&M, spacing should be at least wide enough for a 4x4 utility vehicle (like a John Deere Gator) with a trailer to drive between rows to deliver modules, materials and personnel to all locations on the project site. Beyond this, tighter is usually better. Although row-on-row shading can be a concern, this typically happens in the early morning and late afternoon when the sun’s angle to the modules, and thus their power output, is very low anyway. In addition, more shading occurs in the winter when TOD multipliers and irradiance are low, so the value of lost energy is negligible.
Lowering the tilt angle can be helpful in several ways: It allows for tighter row spacing without increasing row-on-row shading; it lowers the height of the top module (the installers will thank you); and it reduces wind loading on the structure, which could lead to cost savings in the mounting system and support posts and footings. Yes, lowering the tilt angle reduces the system’s overall production efficiency and annual energy yield, but it actually increases these metrics during the summer months when the sun is higher in the sky and the energy is generally most valuable.
Design Process Recommendations
In today’s market, collaboration and compromise are essential to the design process. We recommend following these two rules of thumb: First, put together an experienced team and share information among stakeholders early in the development process. Second, do not let engineers or accountants go at it alone.
Collaboration. It is crucial that project stakeholders share information. In our experience, developers who run an RFP process by holding a group of qualified EPCs at arm’s length and sharing a minimum of information about the project site and PPA end up with average-performing systems. It is imperative to define the project’s revenue objectives and financial parameters at the outset so that all stakeholders are working in the same direction. If EPCs do not have relevant information related to TOD rates and the developer’s fixed costs, they cannot optimize their system designs. Keep in mind that equipment providers know how to squeeze the most energy out of their products, so integrating them into the process early and often is critical.
Compromise. Designing a system for maximum value is a process of finding a healthy compromise between your best engineer and your best cost accountant. Do not let your engineer design the system alone. You may end up with the most efficient PV system and not the one with the best ROI. Similarly, do not give your procurement managers free rein. Commoditized purchasing may secure the lowest-priced modules and BOS equipment and provide the best short-term ROI. However, getting the lowest price or aggressively value-engineering the system may come at the expense of quality, which could increase supply and performance risk and leave millions of dollars in unrealized generation value on the table.
How Is Value Changing?
TOD rates have been the single most important driver to date when trying to extract value from a PV power plant in the desert Southwest, which is the area where EPCs are constructing most such projects. However, designing for TOD rates is not without its inefficiencies. Right now, thousands of megawatt-hours all over the country are literally thrown away in search of peak megawatt-hours, mainly because there are limited low-cost options for large-scale energy storage. This efficiency problem is not unique to solar, as some gas-powered “peaker plants” run close to idle most of the time, waiting for the opportunity to quickly ramp up during peak hours. All of this feels a bit like throwing away perfectly good food just because your refrigerator is full or because you did not properly plan a trip to the grocery store.
Imagine if you could reroute all of that clipped dc energy in the spring from the trashcan to somewhere more valuable. With advancements in low-cost storage, you could immediately capture clipped dc power and push it through the inverter when the system is operating well below its maximum capacity due to weather variation, and do so based on grid demand. The inclusion of low-cost storage in PV system designs will likely further increase dc-to-ac ratios, inverter utilization and PV plant output reliability, allowing PV project developers to offer their customers better value.
In the future, developers will still need to design projects for value, but value will mean something different next year and each year following. Rate structures will certainly change over time as utilities and off-takers assign different values to energy produced at different hours and seasons. In addition, technological improvements, such as higher-voltage systems and higher-efficiency modules, also present opportunities for redefining project value. Clearly, the inclusion of low-cost storage would be a game changer, influencing the way you think about kWh/kWp ratios and assigning more value to clipped power.
Graham Evarts / Suntech Power / San Francisco, CA / suntech-power.com
Matt LeDucq / Brisbane, CA