Joining forces: Why you should look for innovation in your solar energy partner

October 16, 2020Our point of view

Creating a successful solar energy development isn’t about simply producing power from the sun. It’s a careful balance to ensure the most optimal Leveled cost of energy (LCOE) over the life of the project, the best value proposition, and ideal financing conditions. And to get that balance right means that solar energy producers must be at the cutting edge of innovation, in all aspects.

As the industry continues to push new limits each year, there are four ways of addressing innovation in the solar space. Continuous innovation in each area is the only way that solar providers can ensure that they can deliver what investors and companies alike need.

Technological Innovation

The first, and probably most obvious, aspect of innovation in solar is technology. One of the most exciting developments in recent years has been the rapid market adoption of bifacial solar modules, which produce solar power efficiently from both sides. But, when choosing which module is the best option, we don’t believe it’s enough for solar energy providers simply to add in the latest technology and hope for the best. There’s no doubt bifacial modules can increase power production, but accurately predicting the increased output for a system design that covers the additional costs means bringing research and development in-house, rather than simply relying on the vendor or third-party estimates.

At Atlas, we know from long experience that real-world behavior often introduces a slew of new variables to take into account. So, before introducing bifacial modules, we set up our very own laboratory in a utility-scale plant and tested different technologies over one year. This gave us confidence in our modules, and in the actual amount of energy they can produce in a given scenario. The same goes for trackers and inverters. By testing the technology, we can best calculate how to achieve improvements in efficiency across multiple variables – which we wouldn’t be able to do if we just relied on base-case figures available in the market, especially for new technologies that are not yet mainstream.

Digital Transformation

The world of big data is upon us. In the solar space, we have seen huge advances in how digitally enabled technology can drive improvements, from drones for asset inspections to machine learning for monitoring operational plants, and mapping using satellite data.

As we’ve seen in other industries, being able to harness the full potential of what digitalization can offer creates an enormous competitive advantage, and Atlas has made innovation in this area a key priority.

One example of this can be found at our Juazeiro Solar Plant in Brazil. Large renewable energy projects typically involve the addition of a substation, which requires land as well as construction time. By installing the region’s first-ever digital substation, we broke technological boundaries, as well as increasing productivity, safety, and reliability. Compared to a conventional substation, our digital substation requires substantially less space, reduces the quantity of copper wire needed, and facilitates the more efficient operation of utility networks including monitoring, diagnostics, and control ^[1].

Operational Innovation

The cost of solar power has consistently decreased over time, as newer and better technology makes producing energy less expensive. However, getting the absolute best out of that technology to improve reliability – which at the end of the day is what everyone is looking for – means solar producers must seek to constantly improve their value proposition.

Only being able to offer electricity while the sun is shining will not suit all of the clients’ needs, so a strong partner will bring together a range of solutions, from batteries or other storage technology to intelligent grids that enable energy savings, or even allow clients to disconnect from the grid as and when they need to.

By harnessing operational tools, from sensors to artificial intelligence, Atlas continuously seeks out marginal improvements, mitigating risks to its clients and passing on savings and improvements on availability.

Our final goal is to get solar energy to our clients in the best and the most efficient way possible, which means focusing every day on better ways to do things, from our operational systems to our plant construction methods.

Financial and Contractual Innovation

Innovation on the actual nuts and bolts of producing and delivering solar power is one thing, but we believe that a truly innovative partner needs to go even further.

The financing strategy of a solar producer is a major factor in shaping the way they can conduct business and what constraints it has in terms of what it can provide. The majority of solar projects use traditional project finance, which encumbers the asset in favor of the lenders in a one-to-one linkage. While this works perfectly well in most cases, it does mean that there is little flexibility, which means that combining different plants and different off-takers with different power purchase agreements (PPAs), or having the optionality of adding in additional debt tranches and projects, isn’t feasible.

Solar producers who can think outside of the box around financing can lower costs even further, mitigate risks, and pass on these efficiency gains to their clients.

At Atlas, we continually seek out ways to structure our PPA contracts more flexibly while still complying with our risk parameters. By working on better, more sophisticated risk mitigation practices, we can move even closer to our clients, creating contracts that better suit their needs while ensuring a solid, bankable PPA.

Why does having an innovative partner matter?

Innovation has become a competitive necessity for companies around the world. Recent research carried out by PwC showed that, over the last three years, companies that innovate have grown 16% faster than those who don’t, with that gap only set to widen.

In the solar space, with contract lengths of as much as 25 years, choosing a solid, profitable, and growing partner are fundamental to a successful project. The most reliable companies in this industry are the ones that keep improving, as they are the only ones who can provide confidence that they will achieve the objectives set out in a solar PPA.

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