Case of the Shrinking Roof
We entered into the business of installing rooftop solar power plants. A number of interactions with our prospective clients and competition convinced us that something needs to be done to protect the interest of the buyers. A few months back, we decided to shun the path of becoming a solar installer and instead, use the knowledge gained so far to help buyers get value for money and protect the solar rooftop sector from getting a bad name. The reason; a large number of buyers told us that “it (the solar plant) is a waste of money. It just doesn’t work” Little bit of research told us that the reason was a lack of knowledge on part of the buyer and a set of unscrupulous installers taking advantage of this lack of knowledge to sell them dud plants.
“it (the solar plant) is a waste of money. It just doesn’t work”
What I am going to discuss is a case we came across recently. We were called in by a housing township to provide consultancy as owner’s engineer for a RESCO model plant wherein, the supplier will install the plant at his own cost and sell power to the township. Our initial proposal included a customer need analysis and site potential analysis. But the client told us that the supplier had already done that analysis and they only needed support for vetting of the commercial proposal and oversight during installation. We advised the client based on documentation provided to us assuming that as told to us the ground work of site analysis had been completed.
Approach the vendor after getting your site analysed by an owner’s engineer. They are on your side and to protect your interests.
Firstly we saw a number of flaws in the proposed Power Purchase Agreement (PPA) which was loaded heavily in favour of the supplier. I have discussed this issue in my previous article. Once the Letter of Intent (LoI) was placed on the supplier they intimated that they had not yet found a financier for the project. Their quotation mentioned that they are a well funded company with tie up with financier. The buyers could never have anticipated this and signed a three party agreement with the supplier had we not advised them against it.
Now comes the biggest shocker. Initially the company had proposed that a 480 KWp plant can be installed on the rooftop. When he LoI was handed over they came around to say that only 250 KWp plant can now be installed and the hence the per unit price of electricity that they will sell will increase. I asked my client, “but you informed us that a site potential analysis had been done by the seller; how has the plant size halved now?” Had the roofs shrunk in the last two months?
The plant size reduced from earlier proposed 480 KWp to 250 KWp. Had the roof of the building shrunk in two months?
It seems, the supplier had never visited the site physically and done the analysis using low resolution free google maps, sitting in their office. No shadow analysis was done. And now when they actually had to install, they could not find the necessary space. To add injury to insult, the seller now wants an order placed on him before they will do a physical site analysis to come to the actual plant size that can be installed. Had our client taken an advisor/ consultant or an owner’s engineer right in the beginning and allowed them to assess the customer need and site potential before a approaching vendors, this whole issue could have been avoided. We could have saved time and money which will be spent on re-tendering and had the plant going on time.