Welcome to the Solar O&M Insider, the first podcast series dedicated to solar operations, maintenance and asset management. This series is brought to you by Alectris, a global solar asset care innovation firm. The series is hosted by
Glenna Wiseman of Identity3.
This topic is: Solar O&M in Spain. We are talking to Salvador Andreu, Managing Partner of Optimal Sun.
In this podcast, Salvador explains the changes in the Spanish solar PV market and how they impact solar operations, maintenance and asset management. These include:
- Implications for O&M in Spain’s changing solar PV plant ownership structures
- Managing the balance between energy productivity and solar PV plant durability
- Identifying solar preventive maintenance opportunities
- Solar O&M costs in the Spanish secondary market
- Managing island based solar plants remotely
We want to thank Alectris for providing this valuable insight into Solar Operations and Management in Spain.
Glenna: Welcome to Solar O&M Insider, the podcast series dedicated to solar operations, maintenance, and asset management. This series is brought to you by Alectris, a global solar asset care innovation firm. I’m Glenna Wiseman of Identity3, your host.
Today we are discussing the solar market in Spain and the implications for solar operations, maintenance, and asset management. Our guest is Salvador Andreu, Managing Partner of Optimal Sun, who is based in Barcelona, Spain. Welcome to the show, Salvador.
Salvador: Thank you very much, Glenna. It’s a pleasure to participate in Solar O&M Insider.
Glenna: Excellent. Salvador, can you start by giving us some background on how you came to be in the solar industry?
Salvador: Well, I have been in the solar industry since 2008. I began in this exciting market as Country Manager of Kioto Photovoltaics, in Spain. Kioto is an Austrian module manufacturer dedicated to the construction of solar plants.
I have managed the development of 11 plants in Italy and Spain with a total of 12 megawatts of power.
In 2013, I became a Managing Partner of ENcome Energy Performance in Spain. During this time, we developed our market, managing the operations and maintenance of a portfolio of 20 megawatts in 16 PV plants. Additionally, we completed technical diligence for some of our customers and coordinated the construction of two PV plants in Romania, with a total of 12 megawatts.
Optimal Sun and Alectris, Strong Solar Partners in Spain
In November 2015, I created a new company named Optimal Sun that is the official partner of Alectris in Spain. We are dedicated to the operation and maintenance of solar assets and related consultancy services.
Glenna: Excellent. Thank you for the lead-in to Alectris. Can you tell us a little bit about how the relationship works between Alectris and Optimal Sun in the Spanish market?
Salvador: Yes. Optimal Sun acts as the official partner of Alectris in Spain. Optimal Sun develops the Spanish O&M market, providing ACTIS to all of our customers with the support of Alectris.
Additionally, Alectris and Optimal Sun work closely together on operation activities with potential international customers in terms of sales, service concept, and procedures. Finally, the goals of both companies are totally aligned. We are willing to provide the same level of service to our customers in the country where they have assets.
Changing Solar PV Ownership Structures in Spain
Glenna: So for our listeners, let’s just clarify that ACTIS is the award-winning solar ERP system that Alectris has developed. And thank you, Salvador, for that explanation. Let’s dive right into what’s happening in the Spanish solar PV market. We understand that the market there is going through a pretty dramatic shift in how ownership of the PV parks is organized. Can you give us some background on this situation?
Salvador: Yes. This is a very specific thing in our market. The plants developed in 2007 and 2008 that represents 70 percent of the market in Spain were divided in 100 kilowatts each, in order to have a better tariff. That means that for a single plant of three megawatts, which, in every other country is a single plant with one owner, we have 30 companies involved, with 100 kilowatts each, with 30 counters, 30 inverters, etc.
This is a situation specific to our market that requires a lot of very hard work in terms of administration. For some of our customers, it is necessary to prepare tax declarations for 30 companies to manage 30 accounts.
Glenna: That sounds like a whole lot of work to me.
Salvador: Yes, I promise you.
Glenna: Tell us a little bit about how you handle solar O&M and asset management when you have, on average, 30 organizations owning three megawatts, and how that transition to one owner is going?
Salvador: Well, it’s a little complicated. Because, if we continue with this example of three megawatts and 30 organizations, we would need to generate 30 invoices each month for each three megawatt plant. This would involve splitting corrective interventions for common parts into 30 invoices, etc. It’s not something that is easy to manage.
We would also need to manage 30 bank accounts for each plant if we were doing the asset management. As you can imagine it’s not simple but we have to do it. Additionally, there are a lot of plants in Spain where each individual plant belongs to different owners. Or there is a customer that has six individual plants inside the 30 PV plants of the PV park. To summarize, we need the maximum flexibility in our organizational procedures in order to manage these Spanish PV assets.
ACTIS – Going Beyond Solar PV Monitoring
Glenna: Okay. So we talked about ACTIS a little bit ago. How does this solar enterprise resource planning tool, solar ERP, help with the level of detail that you’re having to deal with in this Spanish market?
Salvador: Well, for us, it’s a fantastic tool. ACTIS has a perfect platform to create that information hierarchy. We divide each plant into its minimum components and this allows us to structure our work well. We can organize our invoicing and our operational procedures according to the needs of each individual customer of the plant. The same thing applies to the monthly reporting. ACTIS is absolutely customizable. We can prepare our reporting and adapt it to each customer that has a PV plant. And then we can have different reports for the different owners inside the plant. This is very easy to do with ACTIS.
Glenna: Do you see other types of software in the market that allow you to do the same thing that you are doing with ACTIS?
Salvador: Well, there are other systems in the market but normally those are focused only on monitoring. ACTIS is focused on the operational part also. Everything we do in operations is transferred to the correct part of the monitoring. This helps us to be move quickly in any type of analysis, in any type of reporting, in everything. It’s a very good tool.
Glenna: So, really, the structure of the ownership — on average, 30 for each park moving to one — is really on the asset management side of it? Reporting the financial, that part of the software tool, correct?
Salvador: Yes, that’s it.
Managing the Balance Between Energy Productivity and Solar PV Plant Durability
Glenna: Correct. So then, on the operation side, you talked a little bit about the monitoring. What other kinds of operations and/or performance issues are you seeing in the Spanish market that you’re having to pay attention to? You and I spoke before, and we talked about durability versus highest generation possible. So tell us a little bit about what are your goals, in terms of the operation side?
Salvador: Yes. With the regulation change that was approved in 2014, under the Royal Decree 413, Spain became the first country in the world, I think, with a tariff that is not 100 percent related to production. Additionally, a cut in the tariff was introduced that could be anywhere between 12 and 35 percent, depending on the size and technology of the plant.
In this new concept, the government has defined that the tariff basically has three different points. The plant could receive a fixed amount because of the investment cost of the plant. It doesn’t matter how much the plant produces. If you produce more than the minimum required by the law that is fixed in this Royal Decree, and this is not a high quantity, the plant receives the same amount of money. This is a fixed amount and represents approximately 80 percent of turnover.
And then, we have a variable amount under operational cost concept. The perceives a variable amount rounding 10% of the total that comes from the production, up to a maximum limit of hours
Then you have the market price at which you are selling the energy, which is similar to the RID in Italy. That represents another 10 percent of the amount received.
Identifying Solar Preventive Maintenance Opportunities
Additionally, the regulation has extended the life of the plant from 25 to 30 years. As you can see, this changes the priorities of our customers. Now the priority is not to produce more. It is to produce while being careful with the plant, in order to have five years more of duration.
The increase in production affects only 20 percent of turnover. If I increase the production by five percent, this only increases the turnover of the plant by one percent.
And the customer begins to be more worried about the durability of the components, and not to have to invest there before it’s necessary. It’s for that reason that we need to find the best balance between productivity and durability. In this situation preventive maintenance is getting more important for PV plant management, in order to extend the life of the existing components. And this is where ACTIS is helping us a lot. It helps us analyze where the problems are, to find the causes, and to try to reduce the problems before they appear. I don’t know if it is understandable because our regulations are very particular.
Glenna: Well, that is something to wrap your head around. That it isn’t about necessarily the highest performance that can be generated out of the PV park. It’s about meeting that point at which you are reaping the most advantageous tariff level, for a longer span of life. Is that correct?
Salvador: This is correct. And we need to manage this with very accurate costs, in order to have a perfect balance.
Glenna: So you are doing the same types of monitoring, and incident monitoring, and making sure that the plant is watched on a 365-day level, as would happen in other parts of the world, correct?
Salvador: We are doing the same.
Glenna: Right. But the goal is to extend the life of the plant past the normal 25 years into 30 years and to keep the generation at an optimal range?
Salvador: Exactly. That’s it.
Glenna: Well, you certainly have an interesting job.
Salvador: It’s good because we are not only thinking in terms of corrective actions and how to solve the problems fast. This is a large part of our work. But we need to think a little more in-depth. What happened? Why did it happen? How we can avoid this happening again, in order to avoid the big problems later that could be more expensive and reduce the life of the equipment?
Glenna: And you’re looking at each type of incident very strategically in terms of how and when it is resolved?
Salvador: The customer has less interest in the problem being resolved quickly like most plants. This is not as important as it was before. Now the customer is more interested in lowering cost. This is very clear.
Glenna: So is there anything else that you want to mention about this move in the structure of ownership in Spain, and how it would affect solar O&M and asset management?
Salvador: Well, with the new regulation we have the opportunity to try to reduce this dramatic structure of having a lot of companies working in the PV plant. When we work with the sole owner of these 30 companies, we are now helping our customers merge these 30 companies into one. Now this is something that is possible. With the new regulation, the incentive to have 30 companies has disappeared. And it’s necessary to try to avoid costs. Reducing administration from 30 companies to only one is a big opportunity to reduce costs. This is another area that we are working on with our customers, optimizing the organizational structure.
Solar O&M Costs in the Spanish Secondary Market
Glenna: And it would seem that having all of that organized into the software, organized into one owner, would also help the secondary market. Let’s talk a little bit about the secondary market that’s emerging in Spain. Can you tell us about this trend? What’s happening with the secondary market there? And how does it affect solar O&M and asset management?
Salvador: Yes. In the last year we had a time where the market was at an absolute stand-still. Nobody wanted to speak about any asset in Spain. But now that the new regulation has stabilized, and all the players know how it works, it seems that there is interest in investing in solar assets in Spain again.
With the combination of this new regulation and the cut I was commenting about before — between 14 and 30 percent tariff reduction — there are a lot of individual owners and small companies that had invested in solar O&M in the past that are having difficulties for refinancing the projects. This is a good opportunity for big firms to purchase these assets.
Finally, obviously there is a lot of movement now. We know of several companies that are looking for projects in Spain, and they are purchasing projects. Every month, we know of several companies, several projects that are sold to different firms. And this is making up a bigger concentration of the market. That means that individual firms become the owners of big portfolios.
What influence does this have on O&M? It’s clear. If there are bigger portfolios, then there are bigger pressures in the negotiations of the O&M contracts. So we need to know all the costs we will have, in order to be competitive in this new market. For that reason, ACTIS is a very good tool for us. The combination of the monitoring and operational modules allows us to know where the costs are and how much we spend in each of our activities. And this will help us to be more competitive over time.
Glenna: And there’s two parts of this. There’s the seller’s preparation of his asset, in order to be sold. And then, there’s the due diligence that the buyer needs to have done, in order to ascertain whether the asset is worth acquiring. So you are working on both sides of that?
Salvador: Yes. We are also working on the due diligence concept with the buyer. And we are collaborating with some firms to evaluate the solar asset they want to purchase. Our assessment is not only based on the technical points. We also try to find out how much the new customer or the buyer needs to invest in order to put the plant into good operation. This information could help them with the final negotiations.
Glenna: So in other words, if a buyer has the additional information of exactly where the plants stand within that portfolio and exactly what’s needed in order for them to meet the optimal tariff remuneration or benefit, then you can provide them with those in-the-field, very detailed reports in order to give them a true view of what the site is doing, and what kinds of costs will be expected in the future?
Glenna: All right. We understand that you have an island-based PV plant in Mallorca that’s coming online and that you’re using ACTIS there. Can you tell us a little bit about this project? Also, what do you see as the implications for PV plants in general, in Spain? And for island installations in particular?
Salvador: Yes. We are beginning our operations in a PV plant in Mallorca. This is a new contract for us. The plant has 3.1 megawatts and is a fixed-installation. And working in the islands is different than working in other places. There are several plants in the islands, but there are not a lot of specialized people close to the plants.
For us, it’s important to have a reference person very close to the plant, in order to have good service and quick reaction time. And then electrical contractors wholesalers are not specialized in PV. Then it is necessary to identify the minimum stock you have in the plant, in order to avoid delays in repairs. Logistics is very important in the islands.
Glenna: Okay, so that’s a really interesting point. You have the combination of that cloud-based point of view, that you can actually see what’s going on in the plant. But you have to be able to get manpower and parts, and determine what needs to happen, and have everything you need in order to make it happen. And it’s not just right down the street.
Salvador: Exactly. It’s different than working someplace that you can take the car and get there in two or three hours. To get there, you need to take a plane. And it’s not easy to send specialized engineers for a big problem at the plant.
Fortunately, in Barcelona, we have a very good site collaboration flight combinations with Mallorca. But obviously it is more expensive to operate there than to operate someplace that you can get to without flying.
ACTIS provides us a very good tool for analyzing all the details about the operations of the plant. And to schedule the maintenance in the islands you need to have a very good plan.
Glenna: Perfect. So the last point there was that, having that plan in place and the ability to execute on the plan is important. I really see that what you’re dealing with in terms of that island installation is also happening in the emerging solar markets where the solar industry needs to reach out. And I think that’s why Alectris has so many new global partners. The company can bring the expertise that’s been learned globally into a new market without that new market needing to generate that expertise in a more organic manner. So I think that’s really good insight into some of the logistics and planning of the on the ground issues that are related to island installs.
Well, Salvador, is there anything else that you would like to bring up, related to the Spanish PV market and O&M, that you think will be helpful to the listeners?
Salvador: Well, I think we have discussed most of the differences that we have in our country compared with other countries. No. I think we have touched on the most relevant points.
Glenna: Okay. Excellent. So can you share with our listeners how they can get in contact with you and your team at Optimal Sun?
Salvador: Yes. It’s very easy. They can reach us through our webpage at optimalsun.com. Or through our email at firstname.lastname@example.org. Or by telephone at +34-935-790-727. And if you go to the Alectris website, you can also find our contact information in the partners’ part of the website.
Glenna: Excellent. Well, it is absolutely fascinating and helpful to get insights into what’s happening with the Spanish solar PV market, and the trends related to solar operations, maintenance, and asset management. Thank you, Salvador Andreu from Optimal Sun.
The Solar O&M Insider podcast series is brought to you by Alectris, at alectris.com.
Salvador: Thank you very much, Glenna.