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Do Thermal Scans Make Cents?

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Published in PXYZ

“Price is what you pay. Value is what you get.”

Warren Buffett’s famous quip is extremely applicable in today’s solar environment, where an inordinate amount of conversation is about the value of thermal scans.

Having performed hundreds of MW of thermal scans, it’s obvious to us at Precision XYZ that most of these conversations are really about price, not value. That’s because most of the new drone operators on the market don’t understand the economics of a solar plant.

Let’s take a few steps back and put the whole thing in context.

It’s The Economy…

Virtually every commercial, industrial or utility scale solar plant ever built has an economic assumption about the rate of panel degradation. It’s an assumed constant value over the lifespan of the plant (typically .5% per annum). It’s also the rate at which the whole power plant is assumed to degrade, and it plays a very significant role in the economic value of the power plant over the 20 – 30 years it will produce electricity; bump the degradation value up by 25 basis points or more, and those power plant economics fall over like a carefully laid set of dominoes.

Considering that a utility scale solar power plant might have north of half a million panels, this is sound and rational financial risk assessment. But times change, and so has solar. Lost output (and lost dollars) rest more on larger scale issues than on what happens with individual panels. Many of the thermal scanning providers will pinpoint problems down to the cell level. Except in the cases of extremely lucrative PPAs this is just noise.

Because a solar panel is essentially glass bonded together with extremely durable industrial resins and polymers, when manufactured properly these panels take a very long time to degrade. All of these individual cells are then connected to each other to make a panel, and the panels are connected to each other to make an array.

Panels nowadays are proven technology. And saying that power plant degradation is a function of the panels is a bit like saying the light from a thousand light bulbs is purely a function of how fast the light bulbs burn out. What you should really be thinking about is that power cord.

Christmas Tree Lights

If you’ve been around for a while, you know that in the old days, one bad bulb on your Christmas tree lights ruined the whole string; every light would go out. And so you had to work the string to find the bad bulb. But times change and so did Christmas tree lights. Now you can lose dozens of bulbs but the whole string continues to work. If you see a string of lights out, it’s safe to assume you have a broken wire. Similarly tying plant degradation rate only to the solar panels is old thinking. You need to think about the degradation of the entire plant; the wires, fuses, combiners, inverters, etc.

That brings us back to value vs. price and the confusion around thermal scanning. Many thermal scanning solutions focus their attention on their ability to find a bad solar cell—the equivalent of looking for a bad bulb on a modern string of Christmas lights. In reality it just doesn’t make that much difference anymore.

Consider the economics. The most current utility scale solar power plants are being sold at a bid brice of $.03/kWh or less. Assuming the plant is located in a sunny state with great irradiance like California, this means that each panel generates about $14 of revenue. Per year. Which is about the hourly labor rate for an O&M technician.

In other words, the panel makes about $0.006 per hour.

Value vs Price

Any O&M manager worth their salt can tell you how much their truck roll costs when deploying a crew to fix an issue at a solar power plant. For the sake of argument, let’s say it’s $1000 – meaning it costs the owner $1000 just to get the crew out there to fix a problem.

To pull a panel and then return it to the manufacturer for a warranty claim? Safely assume you’re going to spend $1500. And that’s being generous; I don’t know of any warranty that covers shipping costs. Now, you get some economies of scale when you ship them back to the manufacturer by the crate load—but when you’re sending back that many panels at once, you have bigger problems.

With that math, you’d need at least 200 bad panels before you decide to go through this exercise. And remember, this is a linear problem; the more bad panels you collect the more your costs go up in a (generally) linear fashion.

Bottom line? Unless there’s a systemic issue with a manufacturing run and you’ve got crate loads of bad panels, it almost never makes economic sense to do a thermal scan on a modern solar power plant specifically looking for bad panels.

So Where is the Value in Thermal Scans?

Thermal scans shine most brightly in two realms:

First in system commissioning when a power plant is either first brought online or sold to another party.

Nobody wants to buy a nice new car with scratched paint and nobody should be buying a solar power plant that has broken panels. Developers and construction managers should withhold a minimum of 5% of payment to solar manufacturers until the final thermal commissioning has been completed. Buyers of legacy solar assets should absolutely demand a thermal scan before making an offer.

Second when doing an annual thermal scan during operations to identify big blocks of offline capacity which are otherwise hard to sort through and find with traditional telemetry. Not true you say? We consistently see strings, tables and subarrays offline when conducting our thermal scans, despite some of the best telemetry systems, installed and running at solar plants.

At Precision XYZ, we build a complete financial pro-forma for every power plant we work on. This is true whether we’re scanning the site for thermal anomalies or conducting a survey for a large utility scale plant.

For thermal scans in particular, this provides the owner the peace of mind to know that we’re not going to waste their time and money on a report that tells them to spend $5,000 to save $2,000.

It’s also why we provide a simple online thermal financial calculator so that anyone evaluating a thermal inspection can quickly answer 4 basic questions to find out whether you’re getting value or simply paying a price.

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