The U.S. solar industry is primed for significant growth in the coming years, emboldened by historic federal incentives and demand for renewable energy. But to what extent solar reaches its potential depends largely on how the industry navigates an evolving set of challenges.
Extreme weather, system underperformance, and labor shortages topped the fifth annual Solar Risk Assessment released by clean energy insurance provider kWh Analytics. The report used research from RETC, PVEL, BloombergNEF, Wood Mackenzie, ICF, Raptor Maps, Clean Power Research, National Renewable Energy Laboratory, Energy Sage, and Envision Digital.
“(2022) certainly provided some relief to those who have labored through the most recent turns of the solar-coaster, but we are not out of the woods yet,” kWh Analytics CEO Jason Kaminsky said.
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The declining availability of greenfield land for solar project development is leading developers to regions with harsher climates and, as a result, heightened extreme weather risks.
Hail has become a prominent challenge for developers and asset owners, as modules move toward larger formats with thinner glass.
According to kWh Analytics, moving panels into hail stow mode, where trackers are placed in a high degree tilt to reduce the impact energy of hailstones, is an effective mitigation technique that can reduce property insurance premiums up to 35%.
The firm modeled the revenue impact of a hail stow program to a 200 MW single-axis tracker site in Texas using PVLib and the National Solar Radiation Database.
The firm found that, assuming a $22/MWh PPA, moving into hail stow during extreme weather events throughout the year resulted in production loss of $12,000 or 0.1% of the asset’s $9.75 million estimated annual revenue. But the hail stow program resulted in a property insurance premium reduction of $2 million per year.
“The choice is clear: stow early and stow often when there is a chance of severe weather near your PV project,” the report’s authors wrote.
The report also noted that, based on RETC testing and modeling, PV modules with 3.2 mm tempered front glass over a polymer backsheet are approximately twice as resilient to impact as dual-glass modules with 2.0 mm heat-strengthened glass.
Additionally, PVEL analysis determined that glass//glass modules, which are steadily gaining market share with the popularity of bifacial modules, are more than twice as likely to break compared to glass//backsheet modules.
kWh Analytics found that asset owners are underestimating modeling uncertainty, causing projects to experience P99 outcomes, by definition a 1-in-100-year occurrence, every 20 years.
The firm said the main driver of this discrepancy is the lack of accounting for uncertainty in equipment performance when quantifying the likelihood of downside scenarios. Of the 25 independent engineer reports from recent utility-scale solar projects analyzed by kWh, none discussed incorporating uncertainty due to equipment performance.
Based on a data set of more than 200 utility-scale solar projects, kWh Analytics found the distribution of annual performance index relative to P50 estimates to be strongly left-skewed compared to the normal distribution typically assumed. The years of performance in the long left tail are from systems that experienced significant recurring inverter failures, ground faults, and manufacturer defects, they said.
Courtesy: kWh Analytics Solar Risk Assessment
Asset underperformance continues to plague the solar industry, presenting challenges for owners and investors alike.
Equipment-driven underperformance results in roughly $2.5 billion in losses annually for the solar industry, according to data that is extrapolated from the $82 million in total losses found in the 24.5GW of solar assets analyzed by Raptor Maps in 2022.
Power loss due to anomalies has increased by 94% since 2019, according to Raptor Maps, a trend that could lead to “severe ramifications for the bankability of future projects” amid declining PPA rates.
Large sites have seen the highest percentage increases affecting power production, with power loss increasing by 336% for 50-100MW sites, 243% for 200+ MW sites, and 168% for 100-200MW sites.
Smaller sites have a higher proportion of power loss than larger sites.
“A standardized and centralized system that collates all relevant data in a digital twin – including inspections, power production, irradiance, and equipment maintenance history – is critical for the solar industry’s reliable growth,” the report authors wrote.
Courtesy: kWh Analytics Solar Risk Assessment
In addition to asset operational risks, the solar industry faces corporate operational headwinds, as well.
Nearly half of residential solar companies surveyed by EnergySage said a lack of trained labor is their biggest barrier to growth.
In the 2022 survey, installers reported that a lack of trained labor overtook customer acquisition as the biggest barrier to growing their businesses. Interestingly, despite recent supply chain constraints, only half as many installers (21%)pointed to the availability of equipment as a barrier to growth.
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