The Key to Performance and Risk Mitigation
In utility-scale PV, all those megawatts of direct current must ﬂow through inverters to ultimately reach the grid. Inverters, therefore, play a central role in project risk mitigation. Many of the well- known components of risk are directly linked to the PV inverter: energy production (off-take), delivery schedule, operations, management, and grid integrity, to name a few. In PV, as with most investments, best practices dictate allocating these risks to the parties best capable of managing them.
When developing a bankability index, ﬁnancial strength and stability are foremost factors. Utility- scale PV investments typically have a 20-year design life, if not longer. Developers and ﬁnance partners with output guarantees and liquidated damages on the line look to inverter suppliers to back up these guarantees either with extended warrantees or careful due diligence to provide the assurance that the plant will still be operating in year 10, 20 or 30. In this area, one trend in which solar PV can be expected to follow the wind industry’s lead is the decreased reliance on extended warranties in favor of more stringent supplier selection and due diligence. Among others, project stakeholders should look to common ﬁnancial metrics, such as debt-to-capital ratio and cash ﬂow per share, to properly understand the relative stabilities of inverter suppliers.