Solar asset underperformance continues to worsen, with projects “chronically underperforming” P99 estimates and modules degrading faster than previously anticipated, risk management firm kWh Analytics has found.
kWh Analytics’ new Solar Risk Assessment, released this week, pulls together a raft of industry experts to assess the greatest risks to the global solar industry and has identified a number of serious threats which threaten to reduce investor returns and damage the industry’s credibility moving forward.
The report itself is separated into three sections, detailing the risk to solar assets posed by financial modeling, operational performance and extreme weather. Each section features insight from a range of contributors including the likes of PV Evolution Labs, BloombergNEF, Fracsun and Nextracker.
Perhaps the most notable finding from the report, which builds on a finding from last year’s edition, is that operational solar assets are continuing to experience higher than expected rates of degradation, with annual degradation in the field observed at around 1%.
It cites recent research conducted by both National Renewable Energy Laboratory (NREL) and Lawrence Berkeley National Laboratory, as well as kWh Analytics, as demonstrating that assumptions made in 2016 – that annually solar modules would degrade by around 0.5%, is outdated and underestimates annual degradation by as much as 0.5%.
kWh Analytics’ most recent figures place the median annual degradation for residential solar systems as 1.09% and non-residential systems at 0.8%. The report states that over a 20-year asset life, project degradation could therefore be underestimated by as much as 14%, resulting in severaly overestimated performance and revenue forecasts produced within a P50 model.
The firm says the “system misalignment between actual and estimated degradation” is negatively impacting the industry, and P50 modeling assumptions should be re-evaluated and re-calibrated immediately.