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A key goal of the Growing Pains series is to highlight the role that reliable solar resource data plays in ensuring the success of large-scale solar projects. The previous article demonstrated the impact of using accurate data during the project design phase.
However, within the solar sector, there are often apparent commercial incentives to use certain data sets over others, regardless of their accuracy and reliability. This encourages practices such as ‘data shopping’, or selecting datasets for short-term gain, due to a lack of awareness and transparency within the sector.
With multiple free and paid options available to developers when selecting a dataset, making an informed and impartial decision is crucial.
The critical question to ask is whether a chosen data source is reliable. Following best practice and improving transparency between stakeholders will ultimately ensure higher profits overall while rewarding those who invest in understanding the true potential of their large-scale projects.
This instalment of Growing Pains outlines the challenges created by data shopping and the ‘paradox of choice’. It explains Solargis’ recommendations for tackling these issues – and lays out why taking steps to improve transparency now will help industry players deliver healthier, more sustainable growth over the coming decades.
The reasons that unreliable datasets are used in the solar sector fall under two main categories: ‘data shopping’ and the ‘paradox of choice’. Individuals and organisations may not be aware that they are taking these approaches, which is why raising awareness on all sides is essential.
When securing project finance or selling a project, the highest energy yield prediction will ensure the most favourable financial terms. To produce the largest numbers, the temptation is to choose the dataset that illustrates the highest levels of solar resource, ‘shopping around’ for the data source that suits a particular short-term financial objective.
Outlined below are two examples of how data shopping can occur.
The unbiased insights that Independent Technical Advisors / Engineers can deliver add value to the development process. If it becomes common practice to require advisors to use a particular dataset, it undermines their independence. Advisors are then incentivised to produce the results that their clients want. There are parallels to the financial industry in 2008, where credit agencies gave more favourable ratings to lenders to make themselves more attractive. The project evaluation should be based on a choice of datasets that can be objectively evaluated as reliable.
It is best practice to measure the solar resource on site, for a year or longer, to reduce the uncertainty of satellite-based solar model outputs with accurate ground measurements. If solar model data adapted for the local conditions proves to be lower, it may lead to a temptation to disregard the more reliable, validated results in favour of the original estimate.
Not following transparent processes could have short term benefits for some stakeholders. However, if one stakeholder benefits at the expense of others, this affects the sustainable growth of the industry.
Crucially, as the trend for developers to operate their own projects increases, it is in their own long-term interest to use consistent, validated and accurate data throughout the development process.
Data shopping therefore leads to the following risks:
To tackle these risks, Solargis recommends:
The second key data-related practice that increases risk during the development phase and beyond is often unintentional. It can nevertheless result in underperforming projects and a lack of investor trust.
The commonly used photovoltaic simulation software, PVSyst, allows users to import solar data from over 15 sources, including a mixture of free and commercial options. Without going through a robust evaluation process, unreliable datasets can easily slip through, as the overwhelming choice creates the impression that all data is equal. This is the ‘paradox of choice’.
Selecting an unreliable dataset may lead to the following risks:
To tackle these risks, Solargis recommends:
Below are three general guidelines to help developers select the most accurate dataset for large-scale assets.
Solargis has expanded on this topic in our article, ‘What to expect from your solar data provider’. Learn more here.
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Improving transparency around data practices in the solar sector is an industry-wide effort. Solar project developers have a vital role to play. Whether that is critically evaluating their own data selection processes or providing valuable scrutiny to other stakeholders, the benefits to the sector range from tangible financial returns to an atmosphere of mutual trust.
As projects increase in scale and the stakes are raised, both of these benefits will be crucial to ensure long-term success.
Get in touch to find out more about how Solargis can advise on eliminating bad data practices and increasing transparency for large-scale solar projects: https://solargis.com/about-us/contact
[1] https://static1.squarespace.com/static/5b4e34d1f2e6b166c33dc4f1/t/5ee91426b832f31dd0d8c26b/1592333358437/Solar+Risk+Assessment+2020.pdf