THOUGHT LEADERSHIP

Overcoming potential roadblocks when developing a solar farm

If you are planning a utility-scale solar development, how can you avoid the potential pitfalls and maximise success?

We’ve heard the equation so many times, and it seems so simple: take plenty of sun, add the rising costs of energy, factor in the rapidly falling costs of solar technologies, and throw in an increasing trend towards fossil fuel divestment and social and environmental credit for supporting renewable energies, and you’ve got a no-brainer: solar power is good business.

But while Australia ranks amongst the world leaders for the uptake of smaller scale solar, there is still enormous untapped potential in the utility-scale solar photovoltaic industry. The country has a very large area of high insolation, the solar resource is less variable than wind, solar farms don’t usually have the same level of impacts or objections as wind projects, and sources of funding appear to favour solar over other renewables.

So what could possibly go wrong? Well, there are a number of hidden risks that could have the potential to ‘make or break’ a project.

Potential roadblocks when developing a solar project

In each phase of a renewable energy project, there are some potential roadblocks and challenges that could cause costly delays or reduce your expected return. The more you can do as early as possible to identify, understand and resolve these challenges, the more likely your project is to succeed.

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The stages of a utility-scale solar project (site identification, feasibility assessment, approvals, financial close, construction and operation), and the possible pitfalls in each stage, are reasonably similar to those encountered in all renewable developments regardless of technology.

Having worked on a wide range of renewable projects in Australia, we have learned some key lessons in how to successfully bring renewable energy projects to completion and operation, and how to avoid costly surprises, delays and other setbacks.

PLANNING APPROVAL

If you’ve already been involved in developing any renewable energy project, you’ll know that to maximise your chance of smooth and timely progress, one of the most important investments is early and effective stakeholder engagement. This includes identifying the main issues affecting the social acceptance of your project, such as the history of past projects, council objectives, permit requirements and the requirements of the local power utility.

No doubt, you’ll have experience in developing a comprehensive community engagement plan, with open, honest and extensive consultation. You’ll already have navigated the environmental constraints at project sites, including fauna, flora, Aboriginal heritage, historical heritage, access, stormwater and erosion management, among others. So, in terms of the planning process, is there ‘nothing new under the sun’ when it comes to solar?

Utility solar projects may look reasonably easy, and to some extent this is true. However, most of the same planning processes and timelines will apply as for other developments (including the same long turn-around times if you need to revise anything during the process, or expand the scale of the project). Therefore, as you would for any project, be sure to fully explore and understand the development controls that apply to the site, through the local planning scheme or environmental plan, the various permits and consents that are required to authorise the use and development, and the level of assessment that will be required for permits. And ensure that the specialist studies undertaken are as high quality and comprehensive as you would for any other development.

As well, keep particularly alert for project-specific pitfalls such as airport reflections, very high ground coverage and penetration, working in flood zones, and so on.

Learn more about planning for solar success.

GRID CONNECTION

Proximity to the grid is one of the most important criteria for selecting a site (along with the available solar resource, suitable topography and land zoning). We strongly recommend engaging early with the power utility to ensure capacity and access is available, so that you can export your generation without curtailment. There is also now an extensive range of published information on distribution networks, including zone substation connection capacity, which can provide valuable insights into the best place to connect.

Although your dynamic modelling and connection studies will include the obvious assessments (such as  reactive power capability and fault levels), your project will also benefit from thorough investigation of generating system response to frequency or voltage disturbances, impacts on the network capability, and remote monitoring.

Consideration of network support is another important element of discussions with the power utility and opportunities should be investigated at an early stage as they can shape the details of plant design. In the long term, these supports may form the basis for additional revenue streams or competitive advantage where network stability constraints arise.

Learn more about the art of solar grid connection.

DESIGN

In relation to the design of your solar project, how confident are you that you are using the most appropriate technology, such as modules or tracking systems (where practical and economically viable)? As you select your equipment, be sure that it is certified to the relevant Australian standard, and that all parts are compliant. You should also check that you have included sufficient isolation points, and whether fuse, switchgear or circuit breakers are the most appropriate.

When you are selecting and dimensioning your inverter, consider how it will react if instantaneous condition exceeds the maximum power rating. Does the attempt to change voltage to manage the condition lead to shut down? How can you prevent this, and how did you derive your optimum inverter concept, your string and DC/AC ratio?

In your overall design, consider the implications of a failure in the system. By adopting an AC electrical ring topology, for example, you could ensure the minimum loss of generation. You should also investigate how you will monitor failures and identify faulty modules within an array of thousands, and how to minimise near and far shading on parts of the arrays.

Another important aspect is to implement a ‘Safety in Design’ methodology and check that construction workers and your ongoing personnel have the appropriate training to operate DC and AC equipment and to conduct procedures both effectively and safely.

While almost all aspects of solar plant design appear simple and generally low risk, we know that careful consideration of plant lifecycle can lead to more efficient construction, operation and refurbishment. Good design can reduce failures, lost production and maintenance requirements. This is true of any project, solar is no exception.

Here are the six essentials for solar farm design.

FINANCING

Unlocking secure and adequate project finance is about much more than calculations of financial return on investment. It’s also about offering the investor confidence that your project has adequately considered and planned for all potential risks across the spectrum of financial, technical, stakeholder, community and environmental issues.

To bring your project to financial close you need an offtake agreement of sufficient length, a grid connection agreement, land agreements for the site and transmission route, developmental approval, a bankable yield estimate and a selected delivery model.

Financiers are more likely to provide better terms if there is less uncertainty for the revenue stream over the debt financing period, so the longer the warranty period on the delivery contract the better. Consider how you will monitor defects, and investigate third-party warranty insurance for the lifetime of the project.

Another key factor in offering confidence to investors is the reliability of the site’s solar resource assessment and the project’s energy yield. We recommend that a variety of reliable and appropriate solar resource datasets, with at least 10 years of data, be considered, as well as short-term on-site ground-based measurements. Financiers will also expect that you factor in the possible year-to-year variation and the uncertainties of resource measurement and energy estimation, in addition to loss assumptions and degradation.

A thorough due diligence investigation on your modules will mitigate risk and offer your investors further certainty and confidence. When assessing the modules, make sure you look at the technical test data and its implications for failure rates and degradation, but also explore the track record and capacity of the manufacturer, particularly considering the risk of manufacturer insolvency.

Take a closer look at some key risks often scrutinised by lenders and investors.

If you need support with any aspect of your solar project, or would like to discuss how Entura can help you maximise your project’s success, contact Silke Schwartz on +61 407 886 872 or Patrick Pease.

About the author

Silke Schwartz has over 15 years’ experience in the renewable energy industry in Australia and around the world. She has been involved in the technical due diligence of renewable energy projects in Australia, India and China, including condition assessments, technical assessments and performance reviews.

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August 2, 2016