PV Performance Guarantees (Part 2): : Page 3 of 4

Proof of Performance & Guarantee Structures

DC power output. Measuring dc power output for the array, subarrays, source circuits and modules is obviously important. However, module degradation—a critical variable in PV performance guarantee assumptions—is very difficult to measure in the field. Manufacturer warranties typically guarantee that module output power degradation will not exceed a fraction of a percent per year. It is a challenge, therefore, to prove low performance as part of a warranty claim. It is difficult, if not impossible, to measure a 0.5% change in module output when the system instrumentation has a 1% margin of error. Since module power-output degradation is a slow process, the hope is that accurate power measurements at least identify decisively flawed modules.

Inverter efficiency. Constructs such as CEC and Euroeta efficiency measurements hint at a common condition for all solar inverters—partial load. Some PV performance guarantees ask for an inverter efficiency guarantee, and inverter efficiency is relatively easy to measure. However, there needs to be an allowance for part-load conditions at very low POA irradiance to ensure a good representation of inverter efficiency. As shown in Diagram 1, low power operating conditions are not a good representation of typical or weighted inverter efficiency. One way to limit this problem is by measuring plant performance indices under consistent conditions.

AC collection losses. Like inverter efficiency, dc losses and other irradiance-dependent (and thus current-dependent) system variables, ac collection losses need to be addressed at part-load conditions. Many production models oversimplify the collection system from the inverters to the point of common coupling, an approach that can drastically over- or underpredict metered energy. Because in situ values for ac losses are difficult and expensive to measure, one of the keys to understanding whole-system ac losses is plant characterization. This can be accomplished through verification of the production model used and thorough ac collection system commissioning.

Typical Performance Guarantee

Performance guarantees can take many forms, but typically contain the following elements: term, calculation of performance, expected performance level, damage, cure and limits of damages. The length of the term is chosen to balance the commitment phobia of contractors with the insecurity of investors. Calculation of performance is discussed in detail in Part One of this article. The expected performance level can take different forms, but it is essentially the amount of energy (kilowatt-hours) that the system is expected to produce. The damage describes the amount of money and how it is to be paid. The cure is possibly the most important part of the performance guarantee: it outlines the way that the guarantor can help ensure that the system performs (instead of simply paying the damage). Finally, there is a limit to the amount of damage that can be claimed.

A general performance guarantee for a large-scale PV asset might include the following:

  • Performance guarantee backed by an EPC or O&M company with a substantial balance sheet
  • 5-year term, starting after construction is complete
  • 2-year correction payment period
  • Target plant performance ratio of between 0.70 and 0.90
  • Energy harvest equal to 95% of mutually agreed upon simulation or performance ratio analysis
  • Liability limited to damage of 30% nonperformance

Counterintuitively, some contractors prefer a longer term. This gives them sufficient time to find a way to make the system perform without being obligated to just pay a monetary cure.

It is critical that the guarantor has the ability to cure the lack of performance. The ability to take corrective action gives guarantors comfort because it is how they are generally used to solving problems. The cure might be to add additional modules or increase the efficiency of the inverters. These activities are a good fit with the skills of the guarantor.

The guarantor also needs to account for the contingent liability, which is the amount of money that could be due in damages. However unlikely damages may be, the performance guarantee provider needs to make sure to have enough money to pay those potential bills. The longer the guarantor carries the obligation, the longer this potential bill remains on the books. Although the money may never actually be due, this can negatively affect the returns of the company or limit bonding capacity.

Solar PV systems must operate within a few percentage points of the expected production. A system that is designed, built and commissioned well works close to expected performance— a dramatic loss of production would be 10%. In performance guarantee contracts, it is common to limit the damage due to loss in order to lower the contingent liability and the cost of the performance guarantee. The acceptable terms and conditions are unique for each project and stakeholder. Each set of risks needs to be identified, reviewed and mitigated through the performance guarantee.

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