Maintenance risk

Solar PV Solar PV

Description (What is the Risk)

The risk of maintaining the asset to the appropriate standards and specifications for the life of the project.
Increased maintenance costs due to increased volumes.
Incorrect estimates and cost overruns.

Risk Allocation (Who typically bears the risk)

Allocation: Public Private Shared
Rationale

The Private Partner will have principal responsibility for operating and maintaining the facility in accordance with all applicable laws, consents and the standards of a reasonable and prudent operator (as set out in the power purchase agreement and relevant regulations)

The Contracting Authority may inspect and test the facility to ascertain whether it is maintained to the standards designated by the contracting authority.

If the facility is not so maintained the contracting authority may require the Private Partner to undertake works as necessary to ensure that the facility is maintained to such standards, at the expenses of the Private Partner.

Mitigation Measures (What can be done to minimize the risk)

The Private Partner should take time to ensure that the output specification properly defines the maintenance obligations which it then passes on to the operations and maintenance contractor to ensure that the system remains robust throughout the life of the project.

Pass through obligations to the operations and maintenance contractor and project relief principles equivalent to those set out in the Government agreements will need to be incorporated into the O&M contract.

Comparison with Emerging Market

Maintenance is generally regarded as a low risk for solar PV projects in developed markets. In many markets there is now a deep pool of trained operators and the O&M activities are not complex or expensive.

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Description (What is the Risk)

The risk of maintaining the asset to the appropriate standards and specifications for the life of the project.
Increased maintenance costs due to increased volumes.
Incorrect estimates and cost overruns.

Risk Allocation (Who typically bears the risk)

Allocation: Public Private Shared
Rationale

The Private Partner will have principal responsibility for operating and maintaining the facility in accordance with all applicable laws, consents and the standards of a reasonable and prudent operator (as set out in the relevant Government agreement )

The Contracting Authority may inspect and test the facility to ascertain whether it is maintained to the standards of a reasonable and prudent operator (as defined in the relevant Government agreement).

If the facility is not so maintained the Government Authority may require the Private Partner to undertake works as necessary to ensure that the facility is maintained to such standards.

Mitigation Measures (What can be done to minimize the risk)

The Private Partner should take time to ensure that the output specification properly defines the maintenance obligations which it then passes on to the operations and maintenance contractor to ensure that the system remains robust throughout the life of the project.

Pass through obligations to the operations and maintenance contractor and project relief principles equivalent to those set out in the Government agreements will need to be incorporated into the O&M contract.

Government Support Arrangements (What other government measures may be needed to be taken)

The Contracting Authority will have primary responsibility to maintain the grid connection assets. The Contracting Authority may have wider obligations such as maintenance of access roads and other utilities required for the operation of the project. In some circumstances the Contracting Authority may assume responsibility for facilities which are shared between multiple solar PV projects such as water treatment plants.

Comparison with Developed Market

Large scale solar projects in emerging markets have only been installed and entered into operation in recent years. Although the track record is limited maintenance is generally regarded as a low to medium risk for solar PV projects.

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