Improving Business Efficiency Through Standard Design of PV Plants.
by James Shirley, Managing Director of Hudaco Energy
The PV industry of today is evolving rapidly as system sizes get larger, storage technologies become cheaper and more efficient, regulation changes and market needs change.
It would be remiss of every CEO, CFO and Executive or Board Member to not consider energy costs in their business, or the importance of how shareholders and customers view Environmental, Social and Governance (ESG) policies and operations of companies in the market.
So whilst there may be a lot of will to have PV systems installed, often the decision makers within the business do not have the technical background, nor the time or inclination to understand the details. Their interest in the PV solution requires a financial analysis in order to make a business decision (normally either ROI or IRR).
Common questions which must be answered in order to get a positive result are:
- How much of my total energy consumed can come from the PV system?
- How long is my Return on Investment (ROI), or what is my Internal Rate of Return (IRR)?
- How long will the system last?
- (I don’t know which products or installers to trust)
- How much do I have to invest up front?
- (what is my Capex requirement so that I can put it in my budget).
- How much will it cost to run?
- (what is my Opex requirement, so that I can plan for that annually)
- How long will it take to install so that I can start benefitting?
The key here is that the decision makers need to look at Bankability of their investment. This is not just about capital cost (that is purely for budgetary reasons), but rather about their returns. Some key factors they consider are:
- the risk posed through hardware quality (failure rates),
- the ability of suppliers to honour their warranties (lowest price is most often not a good thing on a project with a 20+ year design lifespan),
- design risk (will the system do what it’s supposed to) and,
- installation risk (is it installed correctly)
The process, in many cases, results in someone within the business being tasked to get this information together to present to the executive committee. Often this ends up being a facility manager, procurement head, or a technical member of the team who may not have the skills or knowledge to even know where to begin.
By following standard business processes, then, it is often the case that they will put out an RFQ or have multiple suppliers provide quotes for a PV plant. In some cases, they even appoint a consultant to do the technical evaluation on their behalf.
So we now have at least one staff member who has never done a PV project before committing a lot of time to the potential project, a consultant working on risk in the hopes that things go well and they can recover their costs after project award, at least 3 separate companies spending 2 days providing a design and quotation (often which don’t match each other, like for like), and in many cases, there is at least one bank or funding partner about to perform a due diligence on the project.
Yet we still don’t have a single cent committed, and all this to get the decision makers the information which they need just to make a financial decision as to whether the project is actually viable.
Now imagine that each supplier/installer (called EPC or system integrator) has 10 potential projects they are working on. That’s potentially 20 days’ labour with not one single cent committed, which simply is not a viable way to run a good business. Not only is it a waste of time to perform a lot of work when the project may not even be valid, but the projects they do win end up carrying the cost for the others on which they spent all the development time.
Rather than having a host of products which can be used and combined in a huge number of configurations, with calculations required on every project, it makes for more sense to simplify the entire quotation process until such time as a financial decision has been made (and the project is therefore real and qualified). In order to do that, the target is that the process should not take much more than 15 minutes (bringing the quotation time for 10 projects down to 150 minutes, from 20 days).
What does this look like, how is this possible?
Well, simply by performing value added engineering ahead of time.
By working with only a few, carefully selected inverters, modules and balance of plant products, the pre-engineered solutions allow for a “standard” system bill of quantities and quotation to be produced with just a few clicks from a drop down menu.
A client has the potential for a 250kVA system to be installed.
Rather than designing a complete custom system, it would be possible to start the process by pulling from a drop down menu, the below configuration:
Sure, this is not 250kVA, but it’s close enough that the CXO decision maker isn’t concerned by the difference. It must be noted, of course, that the inverters are all capable of operating together.
The second step is then to select the location, again from a drop down menu.
By using a few key cities/areas (or grouping by temperature range), this can be an incredibly fast process.
In this case, let’s imagine Johannesburg as the location.
The third step is to then simply click + or – on a menu which has been pre-calculated with the number of possible panels per string to give a DC:AC ratio which is acceptable or preferred by the installer.
This will give a number of total modules, an estimated surface area required, as well as the DC:AC ratio.
Finally, we simply need to select the mounting structure required, given the mounting requirements. Examples could be a wide variety of types,
The result will be an accurate bill of quantities, with the key technical components, including inverters, modules, mounting structures, and AC combiner boxes (including fuses, surge protection, switches and circuit breakers), and estimates on DC cable lengths.
In addition, pricing is available immediately, and the quotation can be saved or printed right away. It is then up to the installer to include their price for labour, site clearing/setup, cranes or additional equipment required, professional fees and P&Gs.
Financial models can be given at the same time (subject to knowing the customer’s tariff), including funded solution estimates (subject to customer and project bankability review at a later date)
Whilst not being exactly 250kVA, a solution has been generated in just a few minutes against which a decision maker, or group of decision makers, can give a yes or no as to whether the company is willing to accept the performance, value and initial conditions.
Once this hurdle is overcome, then the return on invested time improves dramatically for all value players in the chain, and allows customers to receive the information they really want quickly and with a fair degree of reliability. Certainly it may change by a few percent when detailed design is done, but this is declared and understood up front by senior executives who understand the importance and value of getting things done quickly in business.
Hudaco Energy has created our model around allowing our partners and stakeholders to manage this process quickly and efficiently. The below points summarize the value for the end user (final customer), the consultant, the financier and the installation partner (our customer).
- Quick Quoting process to reduce “on risk” time and effort for stakeholders and improve business efficiency.
- Quick Quoting process to reduce waiting time of end user decision makers and improve overall buying experience.
- Warranty from global OEM’s are trusted (Tier 1) to ensure bankability.
- Warranty and support from local supplier are trusted (listed company with over 100 years operation and over R 6 billion annual revenue) to reduce risk and improve after sales experience.
- Pre-engineering through qualified engineers, in collaboration with the OEM’s, increases design accuracy and reduces time spent doing bespoke product and system configuration due diligence.
- A digital experience to allow 24/365 availability of design configurator, quotation tools and product documentation, via desk or mobile device.