Independent power producers (IPPs) adopt various business models when it comes to acquiring solar assets. Some IPPs are deeply involved in the development phase, focusing on site selection and conducting preliminary design studies. Others prefer to acquire photovoltaic (PV) systems that are already under construction. Additionally, there are IPPs that specialize in purchasing operational assets. No matter which business model an IPP follows, they all require engineering services—whether on behalf of the owner or the lender—to ensure the project aligns with its intended goals.
The core objective of these engineering services is to mitigate risks associated with the investment. This can be achieved by identifying and addressing any deficiencies or by thoroughly assessing, validating, and characterizing the project based on its model. Since an engineering review is crucial, it's vital to maximize the benefits derived from it. All things being equal, the earlier Pure Power is brought in as an owner’s engineer (OE) or an independent engineer (IE), the more value we can add to the project.
In the first part of this two-part article, I’ll focus on how to optimize the value of third-party engineering services throughout the project development and pre-construction phases.
### OE Engaged During Development
For IPPs aiming for long-term ownership, engaging an OE as early as possible during the development phase is highly beneficial. Once a suitable piece of land has been identified for project development, an OE can offer valuable preliminary design services. These services encompass due diligence and technical assistance.
#### Due Diligence
The primary aim of early-stage due diligence is to scrutinize the preliminary design, pinpoint deficiencies, and prevent potential issues before construction and procurement begin. During the development phase, the project team typically defines the AC and DC nameplate capacities and starts specifying major equipment. This is also an opportune moment to refine the system design, ensuring the owner meets or exceeds their financial objectives. Doing so ensures that non-recurring engineering budgets aren’t squandered on projects unlikely to achieve the initial financial targets.
An experienced OE with specialized solar project knowledge can significantly reduce risks in the preliminary design process. By spotting equipment utilization and arrangement flaws, the OE can help eliminate potential challenges that might arise during detailed engineering. Additionally, the OE ensures compliance with Interconnection Application requirements as the design progresses. A qualified OE can also verify the accuracy of the project’s PVsyst model and produce a finance summary report, guaranteeing that energy generation is neither underestimated nor overestimated.
#### Technical Services
De-risking assets during development also necessitates detailed plans and robust contracts incorporating relevant technical standards. When engaged early, Pure Power can lay the groundwork for a successful project. These planning activities not only aid in evaluating, selecting, and contracting with engineering, procurement, and construction (EPC) firms but also shield the owner from construction defects and subpar performance.
### OE Engaged During Pre-Construction
For IPPs looking to own projects, cutting corners on owner’s engineering during the pre-construction phase is shortsighted. An OE can bring immense value to project design activities, particularly in the early stages. As I discussed in a previous blog post exploring the "cost of quality," the closer a project gets to completion, the costlier it becomes to rectify issues. The ability to address problems, identify value engineering opportunities, or adjust contracts to minimize ownership risks diminishes once drawings or specifications are released for permitting or bidding.
#### Design Review
The design phase of a project usually involves three sets of drawings corresponding to key milestones: the 30% design drawings are often submitted for the interconnection application; the 60% design drawings are used for the permit application; and the 90% design drawings form the baseline for procurement. It is far less expensive to resolve issues during development or the 30% design stage than later during construction or operations. During the 60% design phase, there are still opportunities to correct problems before they become entrenched in the design and construction details.
#### Value Engineering
Beyond fixing issues before construction begins, an experienced OE can also identify value engineering opportunities during the design phase. Lowering construction costs, boosting production, or accelerating the project delivery schedule are all ways to enhance the value of a solar asset.
#### Planning and Standards
During pre-construction, it’s essential to set expectations and establish benchmarks that set projects up for success later, as I outlined in a previous post about capacity testing to ASTM 2848. Not all performance testing protocols are created equal, particularly from the perspective of an at-risk owner. The same applies to different products or construction methods. One advantage of engaging an OE during pre-construction is identifying and eliminating gaps in design standards, design drawings, contract terms, or test standards that effectively transfer risk from the installing contractor to the long-term owner. Thus, it’s crucial to involve an OE before design drawings are sent out for permit, bid, or procurement.
By leveraging these strategies, IPPs can ensure their solar projects are both financially sound and technically robust, paving the way for long-term success.
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