Stranded Solar Assets Repowered
BioStar Renewables Invests and Re-engineers Systems to Increase Production
Although the solar market and PV technology is still relatively new and continues to evolve, U.S. solar installations have grown seventeen-fold since 2008 — from 1.2 gigawatts (GW) to an estimated 30 GW today.1 While there has been significant growth in solar installations during the last five years, there are number of early projects nearing the end of their planned economic life cycle.
The concept of revamping and repowering is one of the newest in the solar industry and is definitely one to watch, as reported in pv magazine —14 PV trends for 20192. In fact, revamping and repowering may be a requirement for keeping the industry healthy as it continues to mature.
Due to the quick industry spike, some early investors now have inoperable, stranded assets.
“At times, technical/commercial decisions were made due to lack of understanding and knowledge, therefore business plans could not be realized, resulting in upside-down projects,” says Brian Hume, VP of Delivery at BioStar Renewables.
“In the beginning, many builders/developers/owners/operators didn’t truly understand exactly what they were doing nor what was required for success. Models were built to have a 15 to 20 year lifecycle, but are now failing early due to a lack of focus on technical and commercial details,” Hume states.
Experts attribute early builder mistakes to:
- overestimated site production, resulting in decreased revenue
- underestimated operations and maintenance costs
- unoptimized production as well as timely corrective action to identified challenges
Additionally, developers have recognized that installations more than five years old could face issues with increasing repairs, outdated (or no longer efficient) components, and the loss of modules and inverters. However, improvements in components’ technology and quality create opportunities to increase the performance of existing plants through revamping.
Rather than dismantling a site at the end of its economic life, upgrading and improving operating plants becomes increasingly relevant to both manufacturers and PV plant asset managers. Projects reaching the end of life, or have become distressed, can be purchased, repaired, and resold to the original off-taker as a new project.
According to Hume, repurposing the original project can increase the operational life of the plant and reduce soft costs such as legal fees, transaction costs, and project development costs. Consequently, this secondary market is becoming extremely lucrative for BioStar and many others like it.
“With our recent acquisition of a 10MW solar portfolio in New Jersey and Hawaii, we’re repositioning ourselves as a turnaround shop for existing and distressed plants, says Hume. These projects consist of rooftop and ground mounted installations — ranging from 50kWdc to 2.6MWdc.”
BioStar plans to invest in the projects to upgrade the portfolio to a reliable, investment grade, solar asset. And by re-engineering the systems, it expects to increase the overall production of the facilities by up to 10% for the remaining life of the PPAs. Through coordination with the original tax equity investors BioStar was able to keep all tax credit investments in place without incurring a tax recapture event.
“Although BioStar is learning every day how best to manage and operate our stranded sites, our customers are pleased, as the production of power has increased and become more reliable and predictable than before. This increases their savings on power purchased twelve months faster than expected and is an internal target for refinancing and investor return,” says CEO Bill Love.
2. Beetz, Becky. “14 PV Trends for 2019.” pv magazine, December 31, 2018.
https://www.pv-magazine.com/2018/12/31/14-pv-trends-for-2019/ (accessed July 09, 2019).