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Home Sustainability Alternative Fuels

APAC To Account for Half of Global Solar Repair Spend by 2025

by Team Energy Asia
July 3, 2020
in Alternative Fuels, Energy Efficiency, Energy Usage, Power Generation, Renewables, Solar, Sustainability
APAC To Account for Half of Global Solar Repair Spend by 2025
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Solar power systems nearing inverter end of life currently account for 5 percent of the global photovoltaic (PV) market. This number will grow to 16 percent by 2025, or 227 gigawatts, direct current (GWDC) of solar systems. This is according to new research by Wood Mackenzie.

The cost of repowering and maintenance of these solar power plants will come in at an estimated US$9.4 billion by 2025. Of that total the APAC region will account for nearly half at US$4.1 billion.

While it is estimated that solar inverters will need replacing every ten years, some systems present earlier faults.

Wood Mackenzie estimates that approximately 4.2 GWDC of solar assets will run into premature failures in 2020, with this annual total jumping to 36 GWDC in 2025.

“Premature inverter failures will grow as the global PV fleet ages. Though less than 1 percent of systems experience premature failure, between 10 to 12 percent of operation and maintenance (O&M) costs are dedicated to inverter replacements,” said Leila Garcia da Fonseca, Wood Mackenzie Principal Analyst.

The widescale adoption of auctions is driving solar LCOE further down and putting additional pressure on O&M costs, according to Wood Mackenzie.

“Europe has joined the markets that are phasing out renewable energy incentive schemes and introducing auction-based mechanisms. Auctions are emphasising the existent price-based competition for O&M services in established markets such as Germany.

“Developers and asset owners are exploring methods along the value chain to reduce overall costs, assuming more risk. In the O&M sector, this will happen through partnerships with different players oriented to a hybrid structure,” added Daniel Liu, Wood Mackenzie Principal Analyst.

Another factor impacting O&M costs lies in the content of contracts signed by developers and asset owners.

In the long-term, asset owners are likely to incur more costs with an a-la-carte service structure than if opting for an all-in service contract, says Wood Mackenzie.

“In reality, most O&M contracts currently signed on the lower end of the cost range (3-5$/kW/year) miss vital aspects of operating and maintaining a solar power plant properly.

“The typical scope included on current O&M contracts covers very few basic maintenance activities.

“With full-wrap contracts being avoided, vegetation management, corrective maintenance work and module washing are often excluded from the scope, despite being critical to keep solar power plants performing as expected.

“While these activities are heavily dependent on plant location and project specific characteristics, they can roughly represent 40 to 45 percent of a project’s total O&M costs,” added Garcia da Fonseca.

Wood Mackenzie’s global annual solar installation forecast for 2020 has been downgraded by 17 percent to reflect coronavirus impacts. Despite short-term impacts, the market has shown resilience with limited effects on operations. As solar power is expected to play a key role in the energy transition, with annual installations forecast to average 135 GWDC between 2022 and 2025, the O&M opportunity is an attractive one for market players.

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