Technical Certification of PV Power Plants:The Key to Bankability for Commercial and Utility-Scale Solar

International Solar Energy Technology Conference

Santa Clara, California

October 27, 2011

Benjamin A. ComptonCOO & VP Commercial Operations

2

AGENDA

• Quality Assurance of Photovoltaic Power Plants

• Ratings in the Financial Sector

• Ratings (Certification) of PV Power Plants

• Procedure and Validation based on Actual Projects

• Summary

Ensuring Higher Yields through Continuous

Quality Assurance in Every Project Phase

1. Secure basis for investment decisions.

2. Early detection and correction of construction errors leads to fault-free start-up.

3. A professional monitoring system ensures stable returns.

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Planning Phase Construction Phase Operational Phase

Yield Reports

Vendor Audit Construction Supervision Remote Monitoring

Operation & Maintenance

Technical Due Diligence

Technical Acceptance

Technical Consulting

Yield Loss without Continuous Quality Assurance

is on Average about 4%

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For comparison: Fraunhofer ISE, K. Kiefer, LBBW Konferenz Leipzig, 2008: Yield Loss: 3.6%

50%

55%

60%

65%

70%

75%

80%

85%

90%

mean PR: 76.9 %

PV Plants without Professional Monitoring

PV Plants with Continuous Quality Assurance

mean PR: 81.3 %

PV Plants in Central Europe, Year of Operation 2010, Commissioned 2005-2009

Perform

ance R

atio

Why Certification of PV Power Plants?

• Investors and banks require a consistent and reliable basis of assessment for investment decisions

• Standards help insurance companies assess market risks uniformly

• Certifications / Ratings are a common instrument to cover these requirements

• Creates the ability to compare different projects

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6

AGENDA

• Quality Assurance of Photovoltaic Power Plants

• Ratings in the Financial Sector

• Ratings (Certification) of PV Power Plants

• Procedure and Validation based on Actual Projects

• Summary

A Rating is a Highly Condensed Evaluation

• In finance, the rating is an assessment of the creditworthiness of a debtor.

• The credtiworthiness is reduced to a single key performance indicator.

• In the US market, a rating is a prerequisite for borrowing capital in the external capital market.

• Institutional investors are required by law or obligated by their own statutes to only buy bonds with a minimum rating.

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Ratings Scales of Large Credit Rating Agencies

Moody‘s Standard &

Poor‘s

Fitch Designation Description

Aaa AAA AAA Prime Credit risk is almost zero

Aa 1/2/3 AA +/- AA +/- High GradeVery low credit risk. Safe investment with only slight risk of default

A 1/2/3 A +/- A +/- Upper Medium GradeLow credit risk. The investment is safe without any unforeseen events

Baa 1/2/3 BBB +/- BBB +/- Lower Medium GradeModerate credit risk. On average, a good investment.

Ba 1/2/3 BB +/- BB +/-Non-Investment GradeSpeculative

Speculative investment. Possible failures.

B 1/2/3 B +/- B +/- Highly speculativeSpeculative investment. Likely failures.

Caa 1/2/3CCC +/-

CCC

Substantial risks Only with favorable development conditions are there no expected failures.CC Extremely speculative

Ca C In default In default. Major failures.

C D DDD/DD/DIn default with littleprospect for recovery

In default. Major failures with little prospect for recovery.

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Ratings Levels of a Typical Medium-Sized Portfolio

0%

5%

10%

15%

20%

25%

AA

A

AA

+

AA

AA

-

A+ A A-

BB

B+

BB

B

BB

B-

BB

+

BB

BB

-

B+ B B-

CC

C

Perc

enta

ge D

istrib

ution

9

Source: Creditreform

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AGENDA

• Quality Assurance of Photovoltaic Power Plants

• Ratings in the Financial Sector

• Ratings (Certification) of PV Power Plants

• Procedure and Validation based on Actual Projects

• Summary

meteocontrol Provides Comprehensive

Quality Assurance in All Project Phases

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Planning Phase Construction Phase Operational Phase

Yield Reports

Vendor Audit Construction Supervision Remote Monitoring

Operation & Maintenance

Technical Due Diligence

Technical Acceptance

Technical Consulting

PV Plant Certification

An Independent Risk Assessment to Evaluate the

Investment in a PV Project

Benefits for Investors/Banks/Insurance:

• Independent, comprehensive technical evaluation of projects

• Basis for risk assessment

• Comparability of different projects

• Better terms for external capital procurement

• Better deliverability of the investments than equity funds

• Marketing tool

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The Project Developer Receives an

Objective Rating System

Benefits for Project Developers:

• Independent documentation of the quality assurance chain

• Better financing terms

• Higher selling price of the PV plants is possible through documented reliable quality

• Marketing tool

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Foundation and Definitions of Assessment Criteria

• Technical due diligence experience from previous PV projects worldwide

• Quality assurance services for photovoltaic projects with a total investment volume over $10 Billion

• Data from remote performance monitoring and control of more than 23,000 PV systems with an installed capacity over 3.8 GWp

• Classification and rating of manufacturers on the basis of internal data analysis

• Direct insight into production processes (manufacturer audits)

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Consolidation into Criteria Catalog

Comprehensive Catalog Reviews and Evaluates

469 Relevant Criteria

15

Ratings Categories Reflect the

Life-Cycle of the PV Plant

1. Planning phase

2. EPC contract

3. Construction phase

4. O&M contract

5. Operational phase

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• Division into five assessment categories

• Weighted score for each criterion

• “Exclusion criteria“ results in devaluation

• Accredited process is the basis for rating

• Detailed report

• Feedback on the principal points

• Identification of weaknesses

Planning Phase

• Technical Concept and Components

• Yield Reports

• Performance Ratio

• Components

• Security Concept

• General Contractor / Planning

• Documentation and Quality Assurance Concept

• Commercial Concept

• Legal Concept

1717

EPC Contract

• Fundamentals of the EPC Contract

• Technical Criteria

• Project Description

• Project Parameters

• Quality Assurance Concept

• Economic Aspects

• Appendices

18

Construction / Implementation

• Technical Concept and Technical Components

• Yield Reports

• Performance Check

• Components

• Security Concept

• Documentation and Quality Assurance Concept

• Business Management Concept

• General Concept

• Management Company

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O&M Contract

• Fundamentals of the O&M Contract

• Definition of Services

• Remote monitoring

• Repair work

• Preventive maintenance

• Reporting

• Guarantee of revenue and availability

• Costs / Prices

• Appendices

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Operational Phase

• Remote Monitoring Concept

• Remove Monitoring Components

• Software for Remote Monitoring

• Documentation and Quality Assurance Concept

• Management Concept

• General Concept

• Security Concept

• Management Company

• Service Companies

• Reporting

• Procedures in case of malfunctions

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The Accreditation Procedure

• Detailed list of criteria to be applied for PV projects

• Clearly structured process for rating/certification

• Objective, reproducible assessment of all projects

• Accreditation by the German Accreditation Body (DAkkS) has begun

• Regular, independent quality assurance by DAkkS

• Objective: establishment of industry standards

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23

AGENDA

• Quality Assurance of Photovoltaic Power Plants

• Ratings in the Financial Sector

• Ratings (Certification) of PV Power Plants

• Procedure and Validation based on Actual Projects

• Summary

Procedure for a PV Plant Certification

1.1.• Provide all necessary materials and documents

2.2.• Yield simulation based on system configuration

3.3.• Technical Acceptance of the plant including performance check

4.4.• Assessment of the plant based on Criteria Catalog

5.5.• Examination of the rating result by the rating committee

6.6.• Presentation and disclosure of the client ratings

......• Observation and repeat of the rating (3 to 5 years)

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A Technical Rating Certificate will be awarded

after review by the Rating Committee

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Dipl.-Ing. (FH) Martin Schneider

Managing Director, meteocontrol GmbH

Dipl.-Phys. Dr. Daniel Faltermeier

Head of PV Technical Due Diligence

Dipl.-Phys. Dr. Henrik te Heesen

Head of Technical Operations

Dipl.-Ing. (FH) Robert Pfatischer

Managing Director, Head of PV Quality Services

M.S. Eng. Benjamin Compton

COO, meteocontrol North America

M.S. Eng. Christopher Dunne P.E.

VP, meteocontrol North America

Result: Certificate for the PV Power Plant

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Certificate

Photovoltaic Power Plant

San Francisco

Rating Result

AA+

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Certification

Report

Certification

Implementation of the Certification

with low financial overhead

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Quality Assurance Concept

Yield Reports

Vendor Audit

Technical Due Diligence

Construction Supervision

Technical Acceptance

Remote Monitoring

Operation & Maintenance

Certification

Report

Certificate

Plaque

Ratings of PV Power Plants is based on

International Financial Ratings

Rating Designation Description

AAA PrimeExceptionally good PV system. The risk of yield losses of the system is almost zero.

AA +/- High Grade Exceptionally good PV system. The risk of yield losses is low..

A +/- Upper Medium GradeVery good PV system. Only in the case of unforeseen events, there is a greater risk of yield losses.

BBB +/- Lower Medium GradeGood PV system. Under typical operation, problems may occur in rare cases that will cause greater yield losses.

BB +/-Non Investment Gradespeculative

Average PV system. Under typical operation, problems may occur that will cause a greater risk of yield losses.

B +/- Highly SpeculativeBelow average PV system. Under typical operation, problems are likely that will cause greater yield losses.

CCC +/- Substantial risksDefective PV system. Only under favorable conditions, the risk of yield losses is minimal.

CC +/- Extremely speculativeVery poor PV system. Only under very favorable conditions during the operation phase, the risk of yield losses is minimal.

CIn default with littleprospect for recovery

Extremely poor PV system. The risk of yield losses in the normal operation of the plant is very high.

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Maximum Rating of the Distribution of

PV Plants is at “A“

0%

5%

10%

15%

20%

25%

AA

A

AA

+

AA

AA

-

A+ A A-

BB

B+

BB

B

BB

B-

BB

+

BB

BB

-

B+ B B-

CC

C

Perc

enta

ge D

istrib

ution

29

30

AGENDA

• Quality Assurance of Photovoltaic Power Plants

• Ratings in the Financial Sector

• Ratings (Certification) of PV Power Plants

• Procedure and Validation based on Actual Projects

• Summary

31

Summary

• Ratings are a well-known instrument in the financial sector

• Technical assessment of default risk is possible at a glance

• Allows comparability of different projects

• Only minimal additional financial outlay

• Accredited process ensures the highest quality

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Benjamin A. Comptonmeteocontrol North America, Inc.1001 Marina Village Parkway, Suite 403Alameda, California, 94501 USA

Phone +1 (510) 764-6474 | Fax +1 (510) 550-2884info-na@meteocontrol.com | www.meteocontrol.com

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