Tag Archives: energy efficiency

Top Considerations for Optimizing O&M of Solar Power Plants

Operations and maintenance (O&M) of solar power plants are becoming increasingly important in the global photovoltaic (PV) market. While an increasing number of new builds show industry growth, optimizing operations and maintenance is a cost-effective way to improve performance for plants already in use. In fact, many solar power companies are developing more intelligent strategies and practices for O&M. This may include hiring a professional service provider in some cases.

Whether getting outside help or not, there are a couple of factors to consider when looking for ways to improve operation and maintenance of solar power plants:

  • Size
  • Location

Optimizations for either of these considerations can result in improved, more reliable performance. According to a report from PV insider, a 1 percent increase in direct sun exposure can result in $1 million extra in a year’s revenue. With those kinds of numbers, it might be a good idea to explore how to improve a plant’s function, which can be achieved through more strategic O&M.

Size

The size of a solar power plant has a great effect on O&M optimization techniques. For large, compact PV projects, having an in-house operations and maintenance team makes sense. However, if the project is smaller but more spread out, outsourcing to a contracted third-party in the specific regions of the plants may be more efficient.

Additionally, size impacts how you approach power plant operation and maintenance. If the plant is small, the entire project may be tested and adjusted once a year to maximize performance. On the other hand, a system check on a large project may take days to complete, which can result in greater downtime. For this reason, different sections can be checked at different times so improvements can gradually be made and tested against the plant’s overall performance.

Location

When a solar plant is located in a desert area, as they often are, the trackers get more sun exposure, but also have to deal with the elements. Blowing sand collects on tracking devices and can interfere with energy production. This means the sand needs to be washed away frequently, but water is not always readily available in these dry areas. Coming up with an efficient O&M process for minimizing environmental factors is critical to a project’s performance. Solutions could include anything from having a dedicated team on-site to clear sand with vacuums as it builds or using self-calibrating robots that wash away sand with minimal water waste.

Every solar power project is different and therefore will require different solutions for maximum energy collection. Even a plant perfectly designed and installed to precise specifications can be improved once up and running. An O&M strategy has become critical to the long life of a project and is a growing industry worldwide.

How Better Consumer Segmenting Can Increase Energy Efficiency

Changing consumer behavior is no small task. Despite utility companies’ best efforts to encourage energy efficiency, many consumers resist making changes to reduce their energy consumption. According to the latest research by McKinsey & Company (McKinsey), very modest behavioral changes could lead to significant savings — as much as an additional 20 percent of residential power demands.

The research suggests that utilities should improve their understanding of how consumers behave and look for more effective ways of engaging them. Rather than segmenting the market based simply on age or location, it would help to look at it on a deeper level that includes emotional and attitudinal elements. McKinsey’s research identified five consumer segments that show varying levels of concern about energy use:

  • Green advocates comprise 20 percent of the population. They are motivated by perceived environmental benefits from more-efficient uses of energy. They have an interest in using new technologies.
  • Disengaged energy wasters make up another 20 percent of the population. They do not care about saving energy or saving money and are not interested in new technologies.

The rest of the population is motivated by saving money and is made up of three distinct groups:

  • Traditionalist, cost-focused energy savers who are motivated by saving money
  • Home-focused, selective energy savers who are motivated by home improvement
  • Non-green, selective energy savers who are happy to save energy as long as they don’t have to think about it

McKinsey recommends four approaches to engage more effectively with all types of consumers:

  1. Deploy an integrated segmentation approach

The approach should combine demographic as well as attitudinal and emotional inputs.

  1. Employ emotional motivation and attitudinal drivers

The emotional motivations of the segments offer powerful clues to the best approaches to engage them on energy efficiency initiatives.

  1. Increase the use of rebates and incentives

It’s important to tailor these offerings to each market segment based on what motivates them.

  1. Invest in marketing and research

Ramping up marketing and research will be important to better connect with market segments. Simply administering a brief phone survey could place up to 80 percent of consumers in the appropriate segment.

As McKinsey’s research suggests, customer segmentation can provide a great opportunity for U.S. utility and energy retailers. If they target consumer segments more accurately, they can increase energy efficient activities and lower power demands across the country.

Overcoming Market Barriers to Advance Energy Efficiency

The United States has greatly improved energy efficiency over the past several decades. In fact, energy consumption is almost half of what it would have been without efficiency initiatives.

Energy usage and expectations

That is great, but there is a lot of room for improvement. So how do we get there and what is standing in the way?

According to a recent report by the American Council for an Energy-Efficient Economy (ACEEE), a variety of market barriers and failures prevent us from reaching our full energy-efficiency potential:

  • Flawed Information: According to ACEEE, one of the largest barriers to advancing energy-efficiency is our unreliable information. In particular, the report states that our knowledge of the performance of different equipment, technologies, buildings, and other systems is imperfect. Our information related to energy consumption is also flawed, largely because energy savings are so difficult to measure.
  • Split Incentives: When the person making energy efficiency investments isn’t the one paying the actual energy bill (e.g., a landlord/tenant situation), the two not being in agreement can form a barrier.
  • Externalities: These barriers form when the costs and benefits are realized by people outside of the immediate participants in a transaction. This can be unavoidable costs an individual, group, or society incurs, such as pollution or traffic.
  • Imperfect Competition: Prices may be inefficient when there is not a fully competitive market.

According to the ACEEE, the following are ways to overcome these barriers:

Improving Information

  • Improve appliance labeling: Proper labeling will help consumers make decisions at the point of purchase and motivate them to consider energy efficiency.
  • Building labeling and disclosure: Building labeling should inform prospective buyers about the efficiency of a building so they can make more informed decisions. This would also help motivate them to make more profitable investments in energy efficiency.
  • Unfettering energy data: Individuals and businesses can make better decisions when they have proper information about their energy use and savings. This information should be relevant, accessible, and accurate.

Removing Legal Barriers

  • Improving Combined Heat and Power (CHP) interconnection standards: Transparency in the connections process will encourage the use of CHP systems.
  • Fair supplemental and backup power rates: By making this power more affordable and accessible, facilities will see more economic incentive for using CHP.
  • Output-based emission standards: Moving away from input-based standards would help CHP system owners justify the efficiency and environmental benefits of the system.
  • Valuation of ancillary services: If the various ancillary benefits of a CHP system were calculated (e.g., higher system reliability, increased power quality), the economic benefits of the system would be clearer to consumers and utilities.
  • Utility regulatory reform: Investor-owned utilities (IOUs) hinder investment in energy efficiencies and drive utilities to increase revenues. Implementing policies to properly align financial incentives can remove these barriers.
  • Restructure corporate income tax: Make changes so they no longer discourage investments in energy efficiency.

Even though there have been great strides in increasing energy efficiency, more can be done to help consumers save money. Knowing the barriers and possible solutions will allow a continued push toward reaching the country’s energy-saving potential.

Energy-Efficient Homes: How Do They Affect Mortgage Risks?

An investment in energy-efficient home systems and appliances will pay for itself long-term. Unfortunately, many buyers can’t enjoy the benefits of an energy-efficient home because of mortgage financing hurdles. Currently, mortgage pricing and underwriting flexibility do not reflect the savings that energy efficiency brings. If they did, more homeowners might invest in making their home energy efficient, which may ultimately be a benefit to lenders as well.

According to a study performed by the Institute for Market Transformation (IMT), borrowers in an energy-efficient home tend to have lower default and prepayment risks. For default, which is when the borrowers stop making scheduled payments for a period of time, the risks were found to be 32 percent lower in homes that were energy-efficient. Similarly, prepayment, which is when a homeowner pays off the loan early, is 25 percent less likely in an energy-efficient home.

While prepayment is good for the borrower, it can often lead to the lender acquiring less total payment than expected because of the reduced time accruing interest. Since each risk is substantially lower in energy-efficient homes, lenders may want to consider this impact when underwriting mortgages.

Homes in a neighborhood

How Lenders Can Support Energy-Efficient Investments

Lenders can encourage buyers to make energy-efficient investments by offering benefits in exchange for the lower risks that come with these types of properties. Providing more flexibility in underwriting creates a competitive advantage for lenders, both for new loans and those needed for improvements to an older house.

One way lenders can offer support for energy-saving investments is to use energy-efficient mortgages (EEMs). These give lenders flexibility in additional underwriting factors, such as debt-to-income, which may allow borrowers to qualify for lower interest rates and larger loans, even with moderate income. Additionally, EEMs let buyers finance efficiency features at mortgage rates instead of the elevated rates of commercial credit.

Another action lenders can take to foster energy efficiency is to require an energy audit or rating while underwriting the loan. This can lead the homeowner to make more informed decisions and a have a better understanding of investments in energy efficiency, which could result in sustained efficiency long-term.

Lastly, a lender can use energy efficiency as collateral for the loan in an underwriting decision. For example, buyers may get a higher appraisal value for the home if there are energy enhancements. That could result in borrowers enjoying more underwriting flexibility, which may mean the extra cost for making the house more energy-efficient could make it more affordable for the middle-class buyers in high-cost areas.

In addition to the lowered risk, the IMT study suggests owners of efficient homes more commonly meet their mortgage responsibilities. Even though these benefits are considerable, current mortgage underwriting procedures do not account for this. But it might be worthwhile for lenders to adjust their practices and push more buyers toward energy-efficient homes.