On the Origin of EPCs: How the EPC-supplier relationship influences the evolution of solar development

origin of epc illustration

The evolution of EPCs in the solar industry is truly that — an evolution — and not in the cliché business-speak way. For starters, large-scale solar construction is a cut-throat, survival-of-the-fittest environment. Over the years, risky business models failed and bad technology sunk, while successful concepts adapted to the volatile environment.

This process of natural selection has led to all sorts of creatures. Large EPCs that moved into ownership. Racking manufacturers handling more construction responsibilities. Roll formers sending factory-direct systems to the field. And so on. Successful companies redefining the rules as new advantages were discovered and new opportunities emerged.

With this article, we wanted to explore more of those in-between spaces — the adaptations that have been influential in the onward and upward trajectory of the solar industry’s expansion across the United States.

Learning to communicate

If you take out your microscope and examine the elements integral to the broader success of solar today, what you see is a lot of close connections, shared relationships and complementary services.

“Our best suppliers understand that we are in a long-term partnership,” says Chris Perron, SVP of EPC for Nexamp. “When they are supportive of us, we often will standardize on their equipment for efficiency, and good partners will get the bulk of our business.”

Developing relationships and complementary services is no small feat in this high stress, high stakes world of large-scale solar development. On the supplier end for example, consider how often a racking manufacturer provides a front-end design for a winning RFP bid only to lose the actual purchase order and construction to another supplier. On the EPC side, any experience standing around in a field waiting on a missing bolt or overbooked equipment to arrive will drain margins along with good will.

Executing the perfect solar project development starts with accepting that such a concept doesn’t exist. Solar projects are all going to have their obstacles, and the best EPCs are the ones most adept at working through the issues that inevitably do arise. Eric Millard, chief commercial officer at Conti Solar, says Conti contributes part of its success to developing strong supplier relationships to navigate the countless challenges they regularly face.

“Being able to work through any issues that arise is vital,” he says. “Each side of the equation needs to understand what is trying to be accomplished and work together to find the best solution.”

After accepting that risk, everyone agrees communication is a big factor in establishing trust, but what does that communication look like? At Nexamp, Perron says proactive communication with suppliers involves regular calls to lock in on delivery timelines and have the right equipment on site to load or unload as needed. Some of the biggest problems they see in the field are the wrong material being delivered, material not arriving on site when needed, suppliers not being on site to confirm accuracy and unload the product when it does arrive and not having the right equipment on site to complete delivery.

“These issues create confusion and unnecessary slowdowns that impact the overall progress of the project, which ultimately affect our bottom line,” Perron says. “With that good communication, detailed receiving becomes a breeze, which enables greater efficiency in the field and a reduction of shrinkage as a whole across all our inventory. Good communication also means that general management of the hundreds of POs we place becomes easier administratively for both of us because we know how each other thinks.”

The onus is on the supplier to engage and get this process started and have a rolling action plan and process.

“Suppliers who don’t respond to calls or emails in a timely fashion, or who don’t alert us to potential availability or delivery problems ahead of time make it harder for us to stay on track,” Perron says. “Likewise, suppliers who do not take responsibility for their mistakes and try to push the expediting costs onto us, or fail to consult us on order modifications, won’t keep our business for long. We understand that not everything goes according to plan — suppliers just need to provide real-time updates so we can come up with contingency plans to overcome obstacles.”

Nexamp changed its ordering practices over the years to standardize equipment orders as much as possible, which in turn reduced the possibility of human error on both sides. This helps suppliers by streamlining the process and lets everyone focus more on other potential challenges.

“Another area where we have improved is in jobsite delivery. We now try to arrange just-in-time delivery as much as possible so we can keep things moving and suppliers don’t have to deal with a backup of stock or materials,” Perron says.

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Hunter-gatherers

The concept of suppliers providing more than just a product has gone from novelty to expectation. Perron points to greater visibility into the supply chain as a huge new supplier development. “This makes it easier for us to plan accordingly and anticipate any obstacles before they become a serious setback,” he says.

Other positive changes Perron has seen include more generous terms and conditions, expediting options, an ability to maintain higher levels of inventory for individual companies that warrant it based on volume and, in some cases, preferential pricing.

This expectation was driven by innovations and consolidations throughout the supply chain. Consider OMCO Solar, a roll former that has been a supplier and contract manufacturer for just about every racking and tracker company you know. Over time, OMCO realized it could also provide its own factory-direct, branded racking solution, which yielded additional customer benefits.

“Companies that are able to collaborate and leverage partnerships and co-market them will drive more commitment from their customer because of that deeper level of partnership,” says Eric Goodwin, director of solar business development with OMCO Solar.

Goodwin is an advocate for business relationships that are more than transactional. One way OMCO does this is by leveraging its supply chain capabilities, such as provide a monthly index of steel pricing versus location for established customers. This is in addition to regular communication, going over cost roadmaps and collaborating on R&D and problem-solving.

“It’s good to hear from each other when it’s not just a problem,” Goodwin says. “The customers we like to grow with are the ones we can communicate with and always have each other’s back. When you have project execution issues and change orders on contracts, most of those things are impacted by not having a good kick off process or handling of expectations.”

OMCO recently implemented an internal process aimed to enhance customer touchpoints. A purchase order coming in kicks off a cadence of actions and scheduling of activities internally to keep everyone on the same page during each project. “There’s at least one communication planned each week leading up to delivery. Once we start deliveries, we have someone on site to assess everything so nothing is missed.”

OMCO is unique in that it’s also an OEM and can check everything before shipping instead of having to coordinate parts from several different locations. The delightful adage of there being fewer throats to choke.

“There will be issues in the field, but if you don’t respond and pile drivers are sitting there … we can’t let that ever happen,” Goodwin says. “Suppliers need to show root cause corrective action. When suppliers are not doing that and/or have too many balls in the air, it can impact the project or an EPC’s financials.”

Adaptation

Rough Brothers Inc. was founded in 1932 and built its name constructing greenhouses. As that segment started to slow in the 21st century, the company thought its steel roll forming expertise could be a fit in the fledgling solar industry. That move to diversify its product portfolio led to what is now RBI Solar, a leading racking supplier in the 500 kW to 2 MW solar space that can hop in at the very beginning of a project or just show up and build. The company recently acquired SolarBOS as well, which may yield even more purchasing and installation efficiency.

“We recognize how important solar mounting installation is to meet overall project deadlines, which is why we take single-point responsibility for the entire project starting from the initial design to complete mechanical installation of solar modules,” says Kevin Ward, marketing manager for RBI Solar.

CEO Matthew Skidmore says Conti Solar is a frequent customer of RBI Solar for these reasons.

“The leadership of a company sets the pace and the character of an organization. If an environment of collaboration for quality is set at the top, then that rolls through the company,” Skidmore says. “At Conti Solar, we’re striving for excellence and that is what keeps clients coming back. We’re looking for suppliers like us — ready to go above and beyond for customers.”

The RBI story is illustrative of the broader downstream streamlining trend of turnkey solutions influencing solar’s evolution. There’s also the example of Solar FlexRack, growing from Youngstown, Ohio-based aluminum extrusion fabrication company Northern States Metals, to a provider of in-house branded racking systems and turnkey services. They can handle everything from initial engineering, pull testing and foundation design to the final installation of posts, racks and modules. Its TDP Turnkey Solar Tracker even embeds the service component into the product’s identity, an indicator that it’s not just selling a tracker system but a full solution for reducing installation time and cutting operations and maintenance costs.

Conti says these days it expects companies to continue to adapt and deliver more diverse options in current product lines, expand fabrication and install services and develop more real-time material tracking.

Being able to pick and choose from a menu of services not only mitigates dependence on third-party subcontractors, but also frees up EPCs to expand and bid more jobs. This is, of course, if that supplier has earned the trust to function as an extended arm of the EPC.

plug n play

The Plug-N-Play tracker from RPCS combines Array Technologies’ tracker with eBOS suppliers Shoals,
CAB Products and Hellerman Tyton for a full solution.

Better tools

Tracker systems are abundant now, and many of your favorite racking manufacturers that don’t have one (or aren’t yet promoting one) likely will be in the coming year. This is a combination of tracker prices dropping and suppliers working to address the needs of their customers. Meanwhile, the long-established racking and tracker systems on the market have integrated new layers of installation and cost efficiencies.

RP Construction Services Inc. (RPCS), a turnkey construction company that works with Array Technologies, is promoting the Plug-N-Play Solar Tracker system, for example. In addition to the installation advantages gained from its familiarity with Array Technologies DuraTrack HZ v3 single-axis tracker, the Plug-N-Play tracker brings in eBOS suppliers Shoals, CAB Products and Hellerman Tyton for a full solution that saves thousands of feet of trench and conduit while preventing all trench-related schedule delays.

“We are coordinating directly with these various manufacturers to bring products together to form a singular solution,” says Adam Larner, VP of projects for RPCS. “Recently we saw a 28-MW project convert from trenching to above-ground Plug-n-Play halfway through the project as they analyzed and then recognized significant savings by making the switch, even midstream.”

RPCS says this new partnership has simplified its tracker project installations by reducing trenching by 50 percent (eliminating 900 to 1,100 ft of trench per MWdc), utilizing less specialized labor (for string-level electrical connections) and requiring less time (all crimping, labels, wire testing and cutting are completed in the factory). What’s more, the Plug-N-Play Tracker approach also allows for more solar panels per string and fewer combiner boxes per site, cutting cost and solar electrical complications. In all, RPCS has shown $3,000 to $5,000 in savings per MWdc for DG projects. Eben Russell, founder, president and CEO, puts it like this:

“Allowing more of the system to be built in the factory prior to mobilization drastically impacts schedules, keeps the quality level high and consistent across all sites and allows us to manage the work with fewer asset managers. Lastly, building portfolios of projects with identical and uniform high-quality leads to higher ROIs, less transactional cost per project, better control over schedules and higher asset resale value after the full tax benefits are realized.”

Perron says integration like this is the future in the supplier space, bringing more “pre-built” assemblies to the site, which leads to faster, higher quality builds.

“We try to have the suppliers do more product integration in their factories rather than us integrating in the field, leading to better quality installs,” Perron says. “Logically it makes sense. If you can integrate items in an environmentally controlled setting rather than in the field where you do not know what type of weather conditions you will face, it will always lead to higher levels of productivity and higher levels of quality.”

Product line evolution occurs in small ways too based on simple conversations. OMCO was contract manufacturing for First Solar, for example, and without being specifically asked they worked on a redesign idea for its module interface bracket to cut costs. Conversely, proactive customers will explain the pain points they see with designs. Leading up to the debut of its branded, Field-Fast racking system, Goodwin says OMCO made some tweaks to its wire management options and changed the design of its foot bracket to make it easier to package, ship and preassemble in the factory, all of which came directly from working with customers.

What’s next?

With the ITC scheduled to phase out over the next few years and the development pipeline more robust than ever, developers and independent power producers are pushing to get as many MWs installed as possible. Construction schedules will be compressed and competition will be fierce. None of that is new for the solar industry, but the context has changed. Due to the innovations and streamlined services that have emerged from EPC-supplier relationships, “the fittest” will be evolving the conditions in which solar development continues to thrive instead of merely survive.


Communication Keys

Upfront and clear expectations can help build relationships and smooth the processes of solar project construction. Conti Solar highlights these key areas for stepping up communication efforts:

Schedule
Being able to project the delivery of supplies is vital to the success of a project and staying on schedule.

Cost
Understanding the cost of the supplies up front allows developers to accurately model the total cost of the project early on. These projections are necessary for the developer to understand if the project is economically viable. You risk the project not being able to pencil if the supplier raises cost.

Issues
Mitigating risks and potential issues up front is the backbone of trusted EPCs. When issues arise, having a strong relationship with a supplier who is committed to working through a project’s success is a sought-after partner.

Engineering
Getting the right data up front to bid correctly with geotech, borings, etc., is another important element. It sounds simple, but there are myriad complexities to the equation.

Chris Crowell is the managing editor of Solar Builder.

— Solar Builder magazine

Florida Power & Light will install ’30 million solar panels’ by 2030 — how does this stack up in the Southeast?

florida solar panels

Central Florida power generation farm’s solar panels point toward the early morning sun. The panels are mounted on moving racks, that follow the sun, maximizing solar collection capabilities.

Florida Power & Light Company is the largest energy company in the United States as measured by retail electricity produced and sold, serving more than five million customer accounts or an estimated 10 million+ people across the state of Florida. The investor-owned utility announced plans to install 30 million solar panels in Florida by 2030 and has secured solar sites throughout the state to do so.

FPL and its sister company, NextEra Energy Resources, say they are already the world’s largest producer of renewable energy from the wind and sun and, when this plan is completed, they expect to be the largest utility owner and operator of solar in America. But an analysis by the Southern Alliance for Clean Energy using the metric of solar watts per customer frames the utility’s position differently. From the most recent Solar_Southeast_Report_2017:

The future of solar is bright across most of the Southeast. Solar will more than double on average, driven by utilities like Duke Energy Florida and Tampa Electric. Each of these Florida utilities announced solar expansion plans in 2017 that will propel them toward the top of the list in the coming years.

However, the Tennessee Valley Authority (TVA), Santee Cooper, and Seminole Electric Cooperative are not forecast to add solar at a significant pace. Florida Power & Light (owned by NextEra) plans additional solar, but at a slower pace than rival Florida utilities. These utilities operate in a public policy vacuum and the slow pace of solar reflects outdated thinking within the utilities’ management.

southern alliance for clean energy

Does this “30-by-30” plan to install “more than 30 million solar panels by 2030,” change that assessment? It certainly sounds like a big bump, but using the number of panels is an unclear way to quantify a solar energy production goal. Stephen A. Smith, executive director of the Southern Alliance for Clean Energy, put it into context:

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“As with any announcement, the devil is in the details. A commitment to 30 million solar panels does not clearly indicate the amount of power that will be delivered to Florida customers, but we project it will likely double their current stated goal of approximately 4,000 MW. While this is a positive jump in solar development, it’s important to note this will not make FPL a leader in solar watts per customer based on their size in the Southeast or the country. Solar growth is exploding across our region, and we continue to support good policies and actions that maximize Florida’s tremendous solar resource potential.”

— Solar Builder magazine

Bad news: Utility-scale solar dipped in Q3 because of tariffs; Good news: Strong pipeline ahead

PV installation forecast

The Section 201 solar tariffs took a toll on utility-scale solar installations in the third quarter according to the U.S. Solar Market Insight Report for Q3 from Wood Mackenzie Power & Renewables and the Solar Energy Industries Association (SEIA). The residential market, meanwhile, continued to stabilize after a down 2017. Overall, the analysts expect 2018 growth to be flat. In total for Q3, the U.S. solar market installed 1.7 GWdc of solar PV, a 15% decrease from Q3 2017 and a 20% decrease from Q2 2018.

“If not for the tariffs, the U.S. solar market would undoubtedly look better today than it does now,” said Abigail Ross Hopper, SEIA’s president and CEO. “However, as this report shows, this is a resilient industry that cannot be kept down for long. With smart policies in place, the potential for the solar industry is hard to overstate.”

Total installed U.S. PV capacity is expected to more than double over the next five years. By 2023, more than 14 GWdc of PV capacity will be installed annually.

Utility-scale

utility pipeline wood mackenzie

For the first time since 2015, quarterly additions of utility-scale solar photovoltaics (PV) fell below 1 gigawatt (GW), highlighting the impact of the tariffs and the uncertainty surrounding them in late 2017 and early 2018. As a result, the U.S. solar market was down 15 percent year-over-year in the third quarter of the year, but the report notes that a strong project pipeline lies ahead.

“Developers originally planning to bring projects online in Q3 2018 were forced to push out completion dates to Q4 2018 or Q1 2019 due to uncertainty around tariffs,” said Colin Smith, Senior Analyst at Wood Mackenzie. “We did, however, see utility PV procurement outpace installations fourfold in Q3, showing that despite the tariffs causing project delays, there is substantial growth ahead for the U.S. utility PV sector.”

Even with the tariffs, the report forecasts 3.5 GW of utility PV for Q4 2018, and projects that the fourth quarter will be the largest quarter for utility PV installations since Q4 2016, as Wood Mackenzie expects many of the delayed projects to come online by the end of the year.

Residential

On the residential side, Q3 was the third consecutive quarter in which residential PV was essentially flat or marginally up on both a year-over-year and quarter-over-quarter basis after the market had contracted by 15 percent in 2017. Nevada was a particular bright spot as the state experienced steady installation growth, and Florida is on pace for a strong year.
Slightly improving their 2018 forecast, Wood Mackenzie now expects a total of 11.1 GW of new PV installations to come online by the end of the year.

Non-residential

Non-residential PV grew 6% quarter-over-quarter and declined by 6% year-over-year. California’s commercial sector experienced solid growth and New York saw a record-breaking quarter. Minnesota’s community solar build out continued, with more than 400 megawatts added so far this year.

— Solar Builder magazine

Trimark Associates adds new features to its SCADA System for utility-scale solar sites

 

Trimark Associates

Trimark Associates, Inc., a leading provider of metering, SCADA, and energy storage technology solutions for the electric power industry, completed software updates for its T1-S SCADA system. With these enhancements, clients can improve their performance management analysis to optimize power generation and profits. The latest T1-S Vantage User Interface enhancements include the following.

  • Simplified trending and analysis: Users can easily switch between historical and real-time trending values on one dashboard to improve the efficiency of analysis.
  • Portfolio-wide key performance indicators: T1-S Vantage calculates and displays a Performance Index (PI) to indicate if a site’s performance is aligned with the site conditions and an Availability Index (AI) to show whether all the power-producing devices are available.
  • Production forecasting integration: T1-S Vantage integrates production forecasting data from a client’s Clean Power Research (CPR) SolarAnywhere subscription, in addition to Trimark’s proprietary production forecasting model.
  • Control room / operations center dashboard displays: The entire dashboard displays critical performance data for improved visualization and decision-making, with the ability to customize displays.
  • Integrated external file repositories: Clients can access their external files from T1-S Vantage, while maintaining security and access restrictions, eliminating the need to duplicate documents.
  • Third-party gateway integration: T1-S SCADA can view, trend, report, and analyze data in T1-S Vantage from third-party gateways and data loggers.

— Solar Builder magazine

Rhode Island’s largest solar project is on the way via Southern Sky Renewable Energy, Conti Solar

Rhode Island solar project

Conti Solar, a national solar EPC, O&M and energy storage company, is providing full turnkey EPC services for the largest solar installation to date in Rhode Island. Developed by Southern Sky Renewable Energy, the 21.3-MW, Gold Meadow Farms solar project is being constructed in Cranston, Rhode Island. When completed, this solar project will generate clean solar energy for the City of Providence, significantly reduce the capital city’s energy costs and contribute to the state’s Clean Energy Portfolio.

The solar project spans over 100 acres of rugged, rocky terrain. With approximately 53,000 solar panels and 130 string inverters to be installed, the project will employ hundreds of people across the state. In addition, it will drive tens of thousands of dollars in revenue into the communities, through local businesses and taxes. The Gold Meadow Farms solar project is expected to be completed in early 2019.

sb-econference-web-post

Lindsay McGovern, Vice President of Southern Sky said, “Conti Solar has collaborated with our team to rapidly resolve any challenges we face. They are resourceful and responsive. This type of reliability is an important trait for an EPC provider.”

Conti Solar is a leading solar EPC in Rhode Island and builds some of the largest and highest profile projects in the state. The Gold Meadow Farms solar project is one of over 45 MW of projects that Conti Solar is currently constructing in the ocean state. The company’s substantial track record and project experience across solar subsegments including agriculture, landfill, community solar, and large-scale projects drive reliability in efficient project completion for solar developers, utilities and independent power producers. Both Southern Sky and Conti Solar are known for their exceptional problem-solving skills and their dedication to delivering high quality solar projects.

“Southern Sky’s regional knowledge and experience is critical to the success of challenging solar installations. We are pleased to have the opportunity to work with a developer who is focused on executing projects the right way, the first time,” said Eric Millard, Chief Commercial Officer of Conti Solar.

— Solar Builder magazine