Emerging markets: Solar projects need to invest in digitalisation earlier

Jul 7, 2020 | Articles

Constantinos Peonides

Director of Alectris

 

 

 

When it comes to digitalisation, solar has been slow to capitalise on the latest innovations. However, the new dynamics of global project development are rapidly uncovering a number of management challenges through the asset lifecycle that require the consideration of new digital technologies.

 

In the mature markets, post-subsidy regimes have forced developers to go for scale to ensure adequate returns under merchant pricing. In the UK for example, new project developments are rarely less than 40MW, requiring a large land surface area, and by extension, more focus on planning and site design, construction management and operational performance.

 

In the emerging markets, where in some cases tariffs have supported nascent industry, there is a race to build projects on time and on budget, placing a management burden on developers to ensure deadlines are hit, while build quality is maintained.

 

The rush to build

The pressure to build projects is nothing new, of course. Mature markets that were supported by tariffs in Europe – such as the UK and Spain – saw similar urgency. However, to avoid the pitfalls associated with rushed construction, developers in the emerging markets have a new opportunity to integrate digital management practices much earlier in the project process.

 

In practical terms, this would mean onboarding a digital ERP that enables developers to keep track of all associated development documentation relating to build specifications and pave the way for operational performance reporting from the outset.

 

Indeed, investing in digital solutions that can support asset management from a project’s inception will set the trajectory for optimal growth and expansion.

 

Growing pains

While development cycles can pose a number of challenges to test even the best and most practiced solar business, operational management brings its own set of unique considerations.

 

As portfolios grow, fixed and variable costs increase, resulting in a stream of contractual, operational, and technical challenges. Although once a well-oiled machine, asset management responsibilities can quickly become unmanageable without the right digital infrastructure.

 

Furthermore, without the ability to monitor the performance of your plants, it is impossible to ensure optimal operations across all assets; and of course, the broader your portfolio, the more thinly stretched your oversight becomes. The best-case scenario here is wasted time. The worst case is reduced investor interest due to lack of historical data on plant operations.

 

Harnessing an ERP platform that uses sophisticated data analysis to automate crucial asset management activity right from the start of a project results in improved efficiency and cost-saving decision making. While it is possible to adapt mid-project, as some asset managers do when they realise their business plans are not advancing as they had hoped, planning for operations and maintenance activity from the outset will save time and money further down the line.

emerging markets solar

 

The importance of being proactive

In our experience, we’ve found that many asset owners – either those that have purchased a project from a developer post construction, or those still held by their original development partners, there is a temptation to postpone investment in digital asset management only when it’s necessary.

 

But, as we’ve argued before, if you don’t have the right kind of oversight from the early beginnings, you can’t intervene at the right point. With advanced digitalisation software, projects can be managed proactively from the start, enabling asset managers to act sooner through better use of data. Collecting data is one thing; the ability to analyse, understand and act on this data, while reporting transparently to investors, is what makes a plant a success.

 

In order to do this, it is important to not only invest in the ERP tools that can facilitate this, but also to factor in the parts that you are using at the build stage.

 

If, for example, you are working on a rooftop solar project and you chose an inverter that does not have cloud communication capacity – three years down the line, when you suspect your inverter may not be operating correctly, you will lack the digital infrastructure to proactively manage the situation. When we consider that in 2019 alone, 27% of total productivity was lost due to offline inverters, it begs the question; why isn’t this being managed more efficiently?

 

Our bespoke ERP system, ACTIS, grew out of our own need for better ways to optimise our projects – we understand the crucial importance of operations and maintenance in the context of the wider project, and are here to support the healthy, sustained growth of the solar industry through early adoption of digital solutions.

 

We would encourage anyone embarking on a new solar project, or those looking for an improved, unified approach to portfolio management, to get in contact.

 

ACTIS - Renewables’ Enterprise Resources Planning Platform