Insights from Terrasmart’s CapEx to OpEx webinar
What influences a solar project’s profitability? Three Terrasmart employees offered expert answers to this critical question in a recent webinar entitled “From CapEx to OpEx: How to Build Profitable Solar Tracker Projects,” moderated by Solar Builder’s Editor-in-Chief Chris Crowell. With these insights, EPCs and developers can maximize profitability across the lifecycle of a project.
Terrasmart Trio
A trio of Terrasmart subject matter experts covered strategies and tactics across three drivers of profitability (or lack thereof): capital expenditures (CapEx), operating expenses (OpEx), and revenue. The esteemed panel included:
- Chase Anderson | Director of Platform Engineering
- John Goetz | Senior Product Manager – Ground Mount
- Brian Martin | Project Engineering Manager – TerraTrak
Capping CapEx
Capital expenditures include upfront costs, from materials to installations, and can be relatively straightforward to budget. However, hidden costs not accounted for in initial CapEx calculations can derail project timelines and send project costs soaring. Capping capital expenditures is crucial to project profitability.
The team covered three main areas that can affect capital expenditures and trigger surprise costs: subsurface conditions, topography, and installation.
Subsurface conditions: Tricky subsurfaces can increase the risk of refusals. Unexpected refusals can throw a huge wrench into the works, causing lengthy delays, hundreds of thousands in new costs, and an inefficient use of resources. Similarly, the frozen soil phenomenon known as frost heave can cause displaced foundations, damaged modules, and extensive disrepair over time. Frost heave affects profitability in both directions – higher costs and lower production. What’s more, soil corrosion can affect the longevity of a project by weakening foundations over time – creating unexpected costs and/or lower productivity.
Topography: Perfectly flat sites with neatly square borders are a solar project ideal, but these sites are now few and far between. They’ve either been developed or they’re reserved for other uses such as agriculture and construction. This means developers will typically face additional complexities from uneven terrain, ground undulations, odd borders, and other issues that often lead to higher costs.
Installation: Whether or not installations succeed with on-time, on-budget delivery depends on the quality of execution. Inefficient design leads to higher material costs due to more parts in the design or additional costs for replacements, and higher costs of labor.
Optimizing OpEx
Operational expenses are the long tail of a solar project. OpEx covers the costs of running and maintaining a site for 20, 30, or even 40 years over the life of a project. Making the best of site operations in a post-construction phase is surprisingly often overlooked. The secret to success in optimizing OpEx is making O&M as predictable as possible.
Terrasmart’s PeakYield™ software offers real-time site performance monitoring and efficient issue resolution to increase predictability and minimize risks. For example, standard or emergency maintenance can be concentrated on specific parts of a site to limit the impact on the system’s overall production. Remote monitoring allows issues to be addressed without onsite visits, reducing time and expenses in resolution. The software also offers predictive analytics to mitigate weather events and allow a faster O&M response in the case of weather damage.
Realizing Revenue
Because the solar industry is relatively young, there are still some unrealized opportunities for stakeholders to produce more energy and increase site production. Federal and local incentive programs, utility rebates, subsidized loans, and tax exemptions all offer opportunities for stakeholders to boost revenue from new projects and existing sites.
Of course, the Inflation Reduction Act (IRA) is one of the most notable tax-advantaged programs for solar developers and investors. Still, complying with prevailing wage and apprenticeship requirements entails careful documentation and compliance from day one, and partnership among all parties in a project. The domestic content adder of 10% adds another layer of opportunity – if the provider can help document compliance. Terrasmart’s flexible supply chain supports developers with a domestic content project requirement.
Building Smart from the Start
The short answer to “how can I build a profitable solar project?” is: build smart from the start with the right provider. Terrasmart is a single point partner with the ability to own a process from foundation point surveying to module installation and beyond. The value of our partnership offers unique benefits, including:
- Terrasmart is terrain agnostic and unbiased in recommending screw or pile foundations
- Terrasmart absorbs 100% of the refusal risks when we utilize our ground screws
- Terrasmart has deep experience with the terrain, subsurface conditions, and weather challenges in the midwest and northeast
- TerraTrak enables tracker project success in the most uneven or tricky terrains, following the land’s natural contours with its leading 20% N/S slope tolerance
- Integrated foundation and rack installation delivers a peace of mind backed by a track record of two million ground screws installed
- Project feasibility software, machine learning, and advanced analytics support data-informed decisions
With an extensive track record of delivering leading, reliable solutions, from racking, to eBOS, to full execution, we maximize value and bankability on each project. To learn more about ways you can increase solar project profitability, reach out to us here.
