In the tech world, big data means opportunity. For solar, it’s no different.
With solar securitization dominating the news, it’s hard to imagine that only a few years ago, the PV industry experienced a major upheaval on its way to maturity.
2010 began with a clash of the titans as big solar players like SunPower, First Solar, and SunEdison clung to survival, riding out market saturation, panel price drops and the resulting margin squeeze.
This survival-of-the-fittest bloodbath, while ugly, was the sign of healthy market maturation as PV struggled to break into the mainstream. After all, similar shakeouts have occurred in every emerging technology market from color televisions to automobiles to penicillin. With PV panel prices now projected to increase in 2014, we may be seeing the leveling of the market.
In the U.S., a secondary market is emerging as surviving developers sell PV projects to secondary investors such as pension funds that had been waiting for risk profiles to decrease, as was also the case in Europe after solar saturation.
Some areas of the market are evolving quickly. Asset-backed securitization, the process of bundling multiple projects and structuring a relatively illiquid asset into a liquid and tradable one (i.e., a security), by investment bankers, capital providers, REITs, MLPs, and most importantly the emerging class of YieldCos, has even allowed some solar assets to become investment vehicles.
What does this industry consolidation and securitization mean for secondary owners and operators? As mainstream investors group solar assets into large portfolios with geographically dispersed plants totaling thousands of megawatts across the globe, scale will become the new currency. And key to the scale game is big data, high-performance processing and powerful analytics.
Sophisticated PV monitoring systems are turning the massive streams of data from these multi-gigawatt-scale portfolios into an additional source of value. These analytical tools can drive optimization of power production, and eventually return on investment. For savvy secondary owners, it’s no longer just the plant and electrons providing value. Today, it’s the plant, electrons, and vast streams of data, creating three interdependent segments of asset value.
Advanced monitoring systems track direct measures and derived analytics of plant performance from inverters, AC/DC subsystems, external grids, communications systems, and more, and can provide several thousand real-time data points per megawatt, generating terabytes of data for large solar portfolios.
Why is big data valuable? Scale alone justifies paying attention to small changes in plant performance, where a 1 percent savings or increase in efficiency can translate to tens of millions of dollars. It is now possible to analyze equipment performance trends using complex calculations and mathematical models on hundreds of thousands of string-level data. Across gigawatts' worth of installed power capacity, plants can uncover inefficiencies that may correspond to millions of dollars in liquidated damages.
At a recent clean energy industry event, GE’s CEO, Jeffrey Immelt, highlighted the idea of “no unplanned downtime," a paradigm in which monitoring and analytics software create new standards for efficiency. Because of big data, large-scale PV is ripe for this opportunity.
Much like the energy from a power plant, however, data needs to be managed and optimized. Very soon, these mature PV assets will be part of a mainstream asset market.
As “no unplanned downtime” and massive, fleet-wide analytics become a reality, solar portfolio owners and operators may just see another margin squeeze play out -- not unlike the recent industry growing pains, where those who optimize performance and limit downtime outlive the competition and ensure their future.
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Christos Georgopoulos is co-founder and CEO of Inaccess, a global provider of infrastructure monitoring and control solutions for energy and telecom markets, currently monitoring more than 1,200 plants and 1.5 gigawatts of utility-scale solar assets, with a presence in the U.K., southern Europe, North America and Asia.