Author: Chijioke Mama, Africa Energy Analyst, Solarplaza
Even in North American Energy markets, where utility scale solar has become rampant, the industry is yet to arrive at an objective definition of what constitutes a solar plant’s Operation & Maintenance (O&M) services. This is just as much the case with respect to standardized or best O&M practices.
Enter Nigeria and that scenario might even be more complicated. Nigeria, which is expecting - theoretically - about 2GW of utility scale solar capacity in the next 12 to 24 months (based on signed PPA’s and other ongoing applications) has no utility solar O&M footprints or practices. These plants, which are to be scattered throughout Nigeria, will be the first generation of large scale, on-grid solar farms in Nigeria. The challenges that come with being the first are therefore big, but the rewards are even bigger.
Asset owners, Financiers, Regulators and EPC contractors should analyze, grasp, shape and arrest the envisaged O&M challenges that Nigeria could present to utility-scale solar power, for example fluctuating power outputs andprolonged outages. There are several issues, practices and clauses that need to be objectively defined in a nascent market to ensure smooth O&M operations and avoid conflicts and litigations.
Christos Charalampidis is the EMEA Head of Operation & Maintenance at project developer Juwi. His company is currently active in O&M in the Sub Saharan Africa, having established an O&M business in South Africa that services over 120MW of solar assets in different parts of the country. “Solar power markets in the early stage of development do present some special challenges with regards to O&M. First hand working experience and knowledge of specialized fields cannot always be found. This poses a challenge for solar O&M. The lack of support infrastructure, in the form of specialized subcontractors, suppliers or service providers can also pose an obstacle,” Charalampidis argues.
Specific solar markets present very unique challenges and unique data, especially so in Nigeria. While there are many instances where best practices from other Sub-Saharan Markets markets can be transferred, there are still some challenges, unique to Nigeria, that need to be addressed.
Solar O&M challenges in Nigeria arise from two major facets;
From an economic perspective; The Nigerian currency is very vulnerable to devaluations, which increase the foreign currency risks for solar investors. This is of significant concern to ongoing O&M costs, since the absence of local manufacturing capacity for solar power component and accessories, as well as the serious paucity of solar O&M skills, will compel asset managers to procure solar components and talents using foreign currency at a prohibitive cost. Christos says “Some global solar vendors, for example major inverter suppliers, may advertise their offering of support services on a new market, but such support may only come from abroad (with the associated extra cost and delay); it is not common to establish an actual local presence before a market reaches - some degree- of maturity”
On the infrastructure side; with some of the proposed PV plants sited in remote areas where broadband access and communication can be a serious challenge, remote monitoring through detailed data gathering and sharing could be seriously hampered and may add a layer of undesirable O&M costs. This can in turn lower the level of granularity that can be implemented in the monitoring system. According to Hannover Re Africa, an insurance firm focused on PV systems, ‘Qualified system maintenance - including regular objective certifications’ is highly recommended by insurers. Christos adds that “The location of the PV plants, in many cases in the middle of the desert, could pose a challenge in terms of logistics. Materials, required for the replacement of faulty ones, need to be transported over road, for hundreds of kilometers, leading to longer delivery times, making it necessary to store a large amount of spare parts on-site”. Additionally, there is insecurity across several regions in Nigeria which constitutes a viable O&M challenge; especially relating to grid connection. For example, production interruptions at locations external to the plant - such as transmission lines and interconnection switchyards - may entail exposure to insecure terrains and O&M sub-contractors interfacing with hostile local communities. On the security challenges in Nigeria Christos says “security risks should be carefully evaluated and mitigated. Areas with high rate of violent criminality should be avoided and appropriate precautions should be taken in the rest of the country.”
O&M Data requirements exemplify this facet. Absent data arising from solar power nascency and historically poor data sources (locally) can limit the implementation and utilization of essential data regimes and some software tools as well. An example is the envisaged difficulty in estimating the Levelized Cost of Electricity (LCOE) in Nigeria. Since LCOE is now widely used as a metric for estimating the cost of operation and thus future profitability of a solar farm; obtaining the data required for LCOE estimation is a high priority.If margins, actual power output and actual operational cost cannot be estimated with reasonable certainty(due to data impairments) then asset owners may be compelled to deprioritize O&M by downsizing the proposed O&M costs, which will be a challenge for the contractor. ioneering solar asset managers will also have to grapple with absent data on the long-term impacts of Nigeria’s humidity, irradiance and temperature on PV lifespan, performance and power production.
All in all, structuring the solar O&M practice in Nigeria and building country specific best practices, data regimes and experiences, will be a steep hill which stakeholders should now rally to climb together. But amidst the anticipated challenges of solar O&M is the immense first mover advantage it offers to service providers. With attractive irradiance, good regulatory incentives and rapidly expanding consumer demand for solar power, the demand for O&M services is projected to grow geometrically. In the nearby future (12-24 months) about 1200MW is expected even as Nigeria is yet to implement its first solar power auction that will attract more investors and additional capacity. Strong conviction on the viability of the market has led several of the current developers to announce the possible development of additional plant capacity in the short term. Pan Africa Solar for example earmarked up to $1 billion for the development of about 1GW in Nigeria in the long term. These infrastructural, operational, security and economic challenges are therefore surmountable, especially where asset management is approached with local insights and proactive management strategies. This opinion is supported by the fact that most of the enumerated challenges also affect other non-solar businesses in Nigeria, which are still profitable.