Technical Certification of PV Power Plants: The Key to Bankability for Commercial and Utility-Scale Solar International Solar Energy Technology Conference Santa Clara, California October 27, 2011
www.ISETC.org
Benjamin A. Compton COO & VP Commercial Operations
AGENDA • Quality Assurance of Photovoltaic Power Plants • Ratings in the Financial Sector • Ratings (Certification) of PV Power Plants • Procedure and Validation based on Actual Projects • Summary
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Ensuring Higher Yields through Continuous Quality Assurance in Every Project Phase Planning Phase
Construction Phase
Operational Phase
Vendor Audit
Construction Supervision
Remote Monitoring
Yield Reports
Technical Acceptance
Operation & Maintenance
Technical Due Diligence
Technical Consulting
1. Secure basis for investment decisions. 2. Early detection and correction of construction errors leads to fault-free start-up. 3. A professional monitoring system ensures stable returns. www.ISETC.org 3
Yield Loss without Continuous Quality Assurance is on Average about 4% PV Plants without Professional Monitoring
PV Plants with Continuous Quality Assurance
90%
Performance Ratio
85% 80%
mean PR: 81.3 % mean PR: 76.9 %
75% 70% 65% 60% 55% 50% PV Plants in Central Europe, Year of Operation 2010, Commissioned 2005-2009
For comparison: Fraunhofer ISE, K. Kiefer, LBBW Konferenz Leipzig, 2008: Yield Loss: 3.6% www.ISETC.org 4
Why Certification of PV Power Plants? • Investors and banks require a consistent and reliable basis of assessment for investment decisions • Standards help insurance companies assess market risks uniformly • Certifications / Ratings are a common instrument to cover these requirements • Creates the ability to compare different projects
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AGENDA • Quality Assurance of Photovoltaic Power Plants • Ratings in the Financial Sector • Ratings (Certification) of PV Power Plants • Procedure and Validation based on Actual Projects • Summary
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A Rating is a Highly Condensed Evaluation • In finance, the rating is an assessment of the creditworthiness of a debtor. • The credtiworthiness is reduced to a single key performance indicator. • In the US market, a rating is a prerequisite for borrowing capital in the external capital market. • Institutional investors are required by law or obligated by their own statutes to only buy bonds with a minimum rating.
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Ratings Scales of Large Credit Rating Agencies Moody‘s
Standard & Poor‘s
Fitch
Designation
Description
Aaa
AAA
AAA
Prime
Credit risk is almost zero
Aa 1/2/3
AA +/-
AA +/-
High Grade
Very low credit risk. Safe investment with only slight risk of default
A 1/2/3
A +/-
A +/-
Upper Medium Grade
Low credit risk. The investment is safe without any unforeseen events
Baa 1/2/3
BBB +/-
BBB +/-
Lower Medium Grade
Moderate credit risk. On average, a good investment.
Ba 1/2/3
BB +/-
BB +/-
Non-Investment Grade Speculative
Speculative investment. Possible failures.
B 1/2/3
B +/-
B +/-
Highly speculative
Speculative investment. Likely failures.
CCC +/-
Extremely speculative
Only with favorable development conditions are there no expected failures.
In default
In default. Major failures.
In default with little prospect for recovery
In default. Major failures with little prospect for recovery.
Substantial risks
Caa 1/2/3 CC Ca
C
C
D
CCC
DDD/DD/D
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Ratings Levels of a Typical Medium-Sized Portfolio
20%
15%
10%
5%
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CCC
B-
B
B+
BB-
BB
BB+
BBB-
BBB
BBB+
A-
A
A+
AA-
AA
AA+
0% AAA
Percentage Distribution
25%
Source: Creditreform 9
AGENDA • Quality Assurance of Photovoltaic Power Plants • Ratings in the Financial Sector • Ratings (Certification) of PV Power Plants • Procedure and Validation based on Actual Projects • Summary
www.ISETC.org 10
meteocontrol Provides Comprehensive Quality Assurance in All Project Phases Planning Phase
Construction Phase
Operational Phase
Vendor Audit
Construction Supervision
Remote Monitoring
Yield Reports
Technical Acceptance
Operation & Maintenance
Technical Due Diligence
Technical Consulting PV Plant Certification
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An Independent Risk Assessment to Evaluate the Investment in a PV Project Benefits for Investors/Banks/Insurance: • Independent, comprehensive technical evaluation of projects • Basis for risk assessment • Comparability of different projects • Better terms for external capital procurement • Better deliverability of the investments than equity funds • Marketing tool www.ISETC.org
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The Project Developer Receives an Objective Rating System Benefits for Project Developers: • Independent documentation of the quality assurance chain • Better financing terms • Higher selling price of the PV plants is possible through documented reliable quality • Marketing tool
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Foundation and Definitions of Assessment Criteria • Technical due diligence experience from previous PV projects worldwide • Quality assurance services for photovoltaic projects with a total investment volume over $10 Billion • Data from remote performance monitoring and control of more than 23,000 PV systems with an installed capacity over 3.8 GWp • Classification and rating of manufacturers on the basis of internal data analysis • Direct insight into production processes (manufacturer audits) Consolidation into Criteria Catalog
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Comprehensive Catalog Reviews and Evaluates 469 Relevant Criteria
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Ratings Categories Reflect the Life-Cycle of the PV Plant • Division into five assessment categories • Weighted score for each criterion 1. Planning phase 2. EPC contract
• “Exclusion criteria“ results in devaluation
3. Construction phase
• Accredited process is the basis for rating
4. O&M contract
• Detailed report
5. Operational phase
• Feedback on the principal points • Identification of weaknesses
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Planning Phase
• Technical Concept and Components • Yield Reports • Performance Ratio • Components • Security Concept • General Contractor / Planning • Documentation and Quality Assurance Concept • Commercial Concept • Legal Concept www.ISETC.org 17
EPC Contract
• Fundamentals of the EPC Contract • Technical Criteria • Project Description • Project Parameters • Quality Assurance Concept • Economic Aspects • Appendices
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Construction / Implementation
• Technical Concept and Technical Components • Yield Reports • Performance Check • Components • Security Concept • Documentation and Quality Assurance Concept • Business Management Concept • General Concept • Management Company
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O&M Contract
• Fundamentals of the O&M Contract • Definition of Services • Remote monitoring • Repair work • Preventive maintenance • Reporting • Guarantee of revenue and availability • Costs / Prices • Appendices
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Operational Phase
• Remote Monitoring Concept • Remove Monitoring Components • Software for Remote Monitoring • Documentation and Quality Assurance Concept • Management Concept • General Concept • Security Concept • Management Company • Service Companies • Reporting • Procedures in case of malfunctions
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The Accreditation Procedure • Detailed list of criteria to be applied for PV projects • Clearly structured process for rating/certification • Objective, reproducible assessment of all projects • Accreditation by the German Accreditation Body (DAkkS) has begun • Regular, independent quality assurance by DAkkS • Objective: establishment of industry standards
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AGENDA • Quality Assurance of Photovoltaic Power Plants • Ratings in the Financial Sector • Ratings (Certification) of PV Power Plants • Procedure and Validation based on Actual Projects • Summary
www.ISETC.org 23
Procedure for a PV Plant Certification
1. 2. 3. 4. 5. 6. ...
• Provide all necessary materials and documents • Yield simulation based on system configuration • Technical Acceptance of the plant including performance check • Assessment of the plant based on Criteria Catalog • Examination of the rating result by the rating committee • Presentation and disclosure of the client ratings • Observation and repeat of the rating (3 to 5 years) www.ISETC.org 24
A Technical Rating Certificate will be awarded after review by the Rating Committee Dipl.-Ing. (FH) Martin Schneider Managing Director, meteocontrol GmbH M.S. Eng. Benjamin Compton COO, meteocontrol North America Dipl.-Ing. (FH) Robert Pfatischer Managing Director, Head of PV Quality Services M.S. Eng. Christopher Dunne P.E. VP, meteocontrol North America Dipl.-Phys. Dr. Daniel Faltermeier Head of PV Technical Due Diligence
Dipl.-Phys. Dr. Henrik te Heesen Head of Technical Operations www.ISETC.org 25
Result: Certificate for the PV Power Plant
Certificate Photovoltaic Power Plant San Francisco Report Certification
Rating Result AA+
Plaque Certification
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Implementation of the Certification with low financial overhead Certification
Quality Assurance Concept
Technical Due Diligence Vendor Audit Yield Reports
Report
Construction Supervision
Certificate
Technical Acceptance
Plaque
Remote Monitoring Operation & Maintenance
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Ratings of PV Power Plants is based on International Financial Ratings Rating
Designation
Description
Prime
Exceptionally good PV system. The risk of yield losses of the system is almost zero.
High Grade
Exceptionally good PV system. The risk of yield losses is low..
A +/-
Upper Medium Grade
Very good PV system. Only in the case of unforeseen events, there is a greater risk of yield losses.
BBB +/-
Lower Medium Grade
Good PV system. Under typical operation, problems may occur in rare cases that will cause greater yield losses.
BB +/-
Non Investment Grade speculative
Average PV system. Under typical operation, problems may occur that will cause a greater risk of yield losses.
Highly Speculative
Below average PV system. Under typical operation, problems are likely that will cause greater yield losses.
Substantial risks
Defective PV system. Only under favorable conditions, the risk of yield losses is minimal.
CC +/-
Extremely speculative
Very poor PV system. Only under very favorable conditions during the operation phase, the risk of yield losses is minimal.
C
In default with little prospect for recovery
Extremely poor PV system. The risk of yield losses in the normal operation of the plant is very high.
AAA AA +/-
B +/CCC +/-
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Maximum Rating of the Distribution of PV Plants is at “A“
20%
15%
10%
5%
CCC
B-
B
B+
BB-
BB
BB+
BBB-
BBB
BBB+
A-
A
A+
AA-
AA
AA+
0% AAA
Percentage Distribution
25%
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AGENDA • Quality Assurance of Photovoltaic Power Plants • Ratings in the Financial Sector • Ratings (Certification) of PV Power Plants • Procedure and Validation based on Actual Projects • Summary
www.ISETC.org 30
Summary • Ratings are a well-known instrument in the financial sector • Technical assessment of default risk is possible at a glance • Allows comparability of different projects • Only minimal additional financial outlay • Accredited process ensures the highest quality www.ISETC.org 31
Let it shine!! Benjamin A. Compton meteocontrol North America, Inc. 1001 Marina Village Parkway, Suite 403 Alameda, California, 94501 USA Phone +1 (510) 764-6474 | Fax +1 (510) 550-2884
[email protected] | www.meteocontrol.com
Intellectual property rights: Copyright meteocontrol North America, Inc., Alameda California (USA) and meteocontrol GmbH Augsburg (Germany). All rights reserved. Text, images, graphic arts and their layout are subject to intellectual property rights and other protective provisions. They must not be copied for commercial purposes, nor must they be distributed, changed or made available to third parties, without prior consent by meteocontrol North America, Inc. or meteocontrol GmbH. We explicitly point out that images are in part subject to third parties‘ intellectual property rights. 32
