SERIS Industry Day · SERIS Industry Day , August 2017 1 ... Oil & Gas Infrastructure Power plants ... Prodigy 1990 1999 10. SERIS Industry Day,

1SERIS Industry Day, August 2017

SERIS Industry Day

Engineering, Procurement & Construction (EPC)

Selecting your EPC, and proper project execution

Christophe INGLIN

[email protected]

[email protected] Industry Day, August 2017 2

Contents

• What is EPC contracting?

• The dangers of inexperience

• Module due diligence trumps warranties

• Selecting the right EPC


EPC contracting is common in several industry sectors

Lump sum turnkey EPC contracts:

� Reduce project risk by transferring

construction risk to EPC

• Single point of responsibility & accountability

for owners and lenders

• Reduced risk for project owner and lender

• Better cost control (lump sum price for agreed

scope of work)

• Timely procurement & installation (optimises

working capital)

• Better quality & reliability (workmanship &

performance warranties)

� Improve project bankability (faster

financial close, lower interest rates)

Oil & Gas

Infrastructure

Power plants

Petrochemical

Buildings


Develop

EPC companies are central to the PV plant value chain

Select site

Engineer FinanceProcure

& construct

Operate&

maintain

� Select site

� Feasibility study

� Geotechnical

study

� Grid impact

study

� Grid connection

rights

� Land rights

� Project rights

� Select

technology

� Design plant

layout

� Design

structures

� Calculate yields

� Calculate costs

� Cashflow

� Tax treatment

� Sensitivity

analysis

� Debt & equity

� Legal structure

� Turnkey

construction

� Select suppliers

� Manage supply

chain

� Manage site

� Assure quality

� Commission

plant

� Monitor in real-

time

� Maintain

periodically

� Manage

commercial asset

A good EPC ensures PV projects are properly designed, constructed and operated;

profitably and on schedule

Execute

Core EPC activity

Significant EPC involvement

Supporting role for EPC


EPC contractors coordinate multiple scopes of work

(Project developer)

Project investor/owner

EPC contractor (sometimes off-shore/on-shore split)

SuppliersProfessional Engineers

Specialist consultants

Sub-contractors

Lender

Lender’s EngineerOwner’s Engineer


Where do PV EPCs come from?

Origin Examples Pros Cons

Module

manufacturers

extending

downstream

• Comprehensive

performance warranty

• Restricted module choice

• Channel conflict

• Not main mgmt focus

BOS & racking

manufacturers

extending

downstream

• Core electrical design &

commissioning (esp. AC)

• Structural

design/installation

• Restricted BOS choice


• Not main mgmt focus

Specialist PV EPCs • Technology independent

• PV design expertise

• Core company focus = PV

• Financial capability

• Weaker non-core,

eg civil engineering

Owner’s engineers /

Project management

companies

• Technology independent

• Well-informed on price &

performance benchmarks

• Role conflict


General EPC

contractors (civil,

structural, M&E)

• Project mgmt. for large,

complex contracts

• Balance sheet

• Overheads too high for

smaller projects

• Most staff lack specialised

PV experience


Contents






Did these contractors understand what they were doing?

… and who wrote the tender criteria in the first place?

The tree was there first… Who needs straight lines?


Loose contacts lead to DC arcs, causing hot spots and even fires


Structure not designed for high wind load conditions


Never walk on modules! Excessive pressure will crack cells

Avoid standing/walking on PV modules or overtightening frame clamps!

• HSE risk - PV module glass surface can be slippery to walk on

• Excess load causes micro-cracks, which reduce power output

• Max load of 5’400Pa ≡ 550kg/m²

• Standing on one foot exerts ~8’000kg/m²


Micro-cracks lead to power loss over time

After thermal cycling

PMPP = 6.3Wp

Before thermal cycling

PMPP = 7.9Wp

Source: MBJ Solutions GmbH

Electroluminescence test reveals thermal cycling stress cracks

The reduced current affects the entire string of modules


After commissioning: power plants or flower plants?

Solar farm in Germany, 2011Credit: Knut Loeschke

Rooftop PV in CaliforniaCredit: True South

Power plant maintenance requires some gardening work

Power plant layout to consider access for grass cutting and module cleaning

• Consider turning radii of service vehicles

• Consider location of water dispensing points


Contents






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725

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600

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[M

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2010

2011

Top 25 thin film & crystalline cell producers (2010-11)

Production data: Photon International (2012/3)

• Global prod. = 37’185MWp

• Top 25 total = 25’453MWp (68%)

• Top 25 each >450MWp

• What are the survival prospects for

producers outside the top 25?

• How credible is their 25-yr warranty?

Defaulted on bonds,

insolvent, acquired by

Shunfeng

Defaulted

on bonds,

insolvent

Insolvent, acquired by

Hanwha & Hanergy Bankrupt

Acquired

by Foxconn


Better if you do not to have to rely on warranties!

• Even the best warranties will be expensive to enforce

• Who pays forensic cost of establishing warranty claim?

• Who pays cost of dismantling and shipping modules to factory or test institute?

• Who pays return shipping cost and reinstallation cost?

• What if original module format (dimensions) no longer in production?

• Who bears consequential losses, ie lost plant output before modules are replaced?

• Warranty is meant to reassure you of product quality. But low-quality

manufacturer is more likely to go bankrupt before 25-yr warranty term

ends.

• Isolated defects less of a concern than a systemic problem, triggering company’s

collapse

• Warranty insurance might not readily apply to sub-utility-scale projects

Proper due diligence aims to source modules that will never trigger a warranty case


How many listed companies will outlive a 25-yr warranty?


How many high-tech companies last 25 years?

Remember these former icons?

• Be cynical and bet module manufacturer

will not last 25 years…

• … then do your DD to source modules

that will outlast their makers.

Commodore Pet (1977)

Bankrupt 1994

Atari ST (1985)

Brand ceased 2001

Internet brand Born Died Age

Compuserve 1979 2009 21

Alta Vista 1995 2013 18

Netscape 1994 2008 14

Prodigy 1990 1999 10


Contents






Don’t just look at price! Is the contractor is truly competent?

Track record – what have they really done?

For EPC, past performance = best

indicator of future performance

Relationship with key suppliers

Training and after-sales capability

Check references and customer

testimonials, plus kWp installed

Also check key personnel

Letters of authority and training certificates

Inverters and spare parts in stock

Monitoring capability

Documented technical competenceAccredited by recognised bodies

ISO9001, SEAS/WDA (system design)

21

Photovoltaics – powering the future, today.

Christophe INGLIN

[email protected]

Documents

SERIS Industry Day · SERIS Industry Day , August 2017 1 ... Oil & Gas Infrastructure Power plants ... Prodigy 1990 1999 10. SERIS Industry Day,