Welcome to the Flowing Sales Podcast! In this episode, we're diving deep into the booming renewables industry. Our guest, Rudy Wodrich, an expert from Siemens, shares invaluable insights on making solar projects successful, particularly focusing on utility-scale and community solar projects. We'll explore: The top 10 considerations for solar projects using inverters Real-world studies and data to ensure maximum ROI Avoiding common pitfalls like noise pollution and inefficiencies The importance of grid standards, warranties, and bankability Practical tips for field maintenance, scalability, and flexibility Domestic content implications and maximizing tax credits Don't miss this opportunity to learn from a seasoned professional and enhance your solar project strategy. Be sure to like, comment, and subscribe for more expert insights on increasing sales efficiency in the renewables industry.
[00:00:04] Welcome everyone to the Flowing Sales Podcast.
[00:00:06] We are excited today.
[00:00:07] We're talking about the renewables industry, big industry doing nothing but growing.
[00:00:12] Lots of manufacturers and reps obviously very interested in the space for good reason.
[00:00:17] And I think it's going to keep growing as we move into the future here.
[00:00:20] So we are very excited to have Rudy Woodrich with us.
[00:00:23] He's an expert in the space.
[00:00:25] Been working in it for a long time.
[00:00:27] Works at Siemens, one of the largest manufacturers in the world.
[00:00:30] They're very big in the renewables space, as you may know.
[00:00:35] So Rudy, welcome to the show.
[00:00:36] We're glad you're here.
[00:00:37] Thank you.
[00:00:38] Appreciate it.
[00:00:38] Awesome.
[00:00:39] And what we're going to do today is we'll have a little introduction from Rudy to
[00:00:43] tell you his experience and we're going to go into kind of the top 10 things.
[00:00:47] We're going to hit 10 things that Rudy's seen.
[00:00:49] He has some studies, some data we're going to go over.
[00:00:51] So it's going to be really interesting about how to make solar projects
[00:00:55] specifically with inverters successful.
[00:00:58] So you can avoid the pitfalls and you can make sure you're going to get the
[00:01:01] biggest RLA at your projects.
[00:01:03] So Rudy, you mind giving a quick bio of yourself?
[00:01:06] Sure.
[00:01:06] So I'm Rudy Woodrich.
[00:01:08] I'm the director of the green technologies business for Siemens
[00:01:12] industry here in the United States.
[00:01:14] Basically our team takes care of the hardware requirements for solar
[00:01:19] projects as well as energy storage.
[00:01:23] And we're very soon going to be migrating into the power conversion
[00:01:27] piece required for green hydrogen electrolyzers as well.
[00:01:31] So basically we take care of all of the, everything from the medium voltage
[00:01:34] switch gear down to the inverters on solar projects.
[00:01:38] And we really focus very specifically on utility scale and community solar.
[00:01:44] So community solar would be projects in the, you know, one megawatt to
[00:01:47] five megawatt ground mount, and then utility scale is really anything bigger
[00:01:51] than that.
[00:01:52] And we have a couple of different types of solutions.
[00:01:56] Specifically today, we're going to be talking a little bit about the 10
[00:02:00] things to consider when you are designing a utility scale project or
[00:02:06] community solar project using string inverters.
[00:02:09] We also have a central inverter product line and maybe at the end,
[00:02:13] we'll talk a little bit as a bonus topic about when's the right time to
[00:02:16] migrate your design to topology from string to central.
[00:02:19] That sounds great.
[00:02:19] So let's dive into the 10 here and we'll go through the first one I
[00:02:24] thought was interesting, and that's noise pollution, which I wouldn't have
[00:02:27] thought of necessarily.
[00:02:28] So why don't you talk to us a little bit about that?
[00:02:30] Yeah, well these community solar projects are typically just that.
[00:02:34] They're in the community, right?
[00:02:35] They are quite often located or co-located with residential areas.
[00:02:41] And it's important to consider the impact of any project on your neighbors.
[00:02:45] So you need to look at the noise level, the audible noise level out of
[00:02:49] the equipment that you're going to be installing.
[00:02:50] And inverters tend to be the noisiest, potentially the noisiest component
[00:02:54] that you're going to install on the project.
[00:02:56] Solar panels don't make any noise, but inverters and transformers definitely do.
[00:03:00] Inverters do because they're switching IGBT devices, semiconductors at very
[00:03:06] high frequency that can generate a lot of audible noise that can transmit
[00:03:10] across the field to the neighbors.
[00:03:12] So I always tell people be very cautious.
[00:03:16] There are some products on the market that have audible noise declarations
[00:03:20] that are in the 70 to 80 decibel range.
[00:03:22] The units that we sell are less than 60 decibels.
[00:03:25] And with audible noise, you have to keep in mind that a 10 decibel
[00:03:29] difference actually means that something is twice as loud.
[00:03:32] So if you go from 60 to 70 decibels, it's twice as loud.
[00:03:36] If you go from 60 to 80 decibels, it's four times as loud.
[00:03:40] So this is something to consider.
[00:03:42] There have been a couple of high profile instances of the local
[00:03:46] homeowners association or residents banding together and suing a renewable
[00:03:51] energy project over audible noise concerns that happened after the commissioning.
[00:03:56] So it was something that wasn't taken into account during the design.
[00:03:59] And then the developer had to do some mitigation techniques after
[00:04:04] the fact to deal with the audible noise, whether that be the planting
[00:04:07] trees or adding of earthen berms around the exterior of the project.
[00:04:13] All of these things can add to your project costs.
[00:04:15] So it's certainly something that you need to consider
[00:04:17] as part of the design process.
[00:04:19] Yeah, that's interesting.
[00:04:20] So you said yours are around 60 and usually they're about 70.
[00:04:23] What's the, can you give us just a, what sound is
[00:04:25] about 60 decibels versus 70?
[00:04:27] I mean, 60 decibels is probably about the level that we're speaking at.
[00:04:31] You know, that's kind of a conversation in a standard sort of room.
[00:04:36] 70 decibels is, you know, as someone really kind of, you know,
[00:04:40] speaking really loudly or yelling.
[00:04:43] It's kind of typical for equipment noise, you know, like a, like a
[00:04:46] tractor or something like that running 80 decibels is like a freight train going by.
[00:04:50] So, you know, you have to think about this in terms of, you know, how is it
[00:04:54] going to impact the neighbors?
[00:04:55] You know, this is not something that's exclusive to our industry.
[00:04:57] There was recently a, I can't remember if it was 2020 or 60 minutes talking
[00:05:02] about data centers, you know, and the proliferation of data centers specifically
[00:05:06] in like, you know, Arkansas and Mississippi where they didn't put any
[00:05:09] regulation in place and there are now homeowners there that are at their
[00:05:12] wits end because they can't live with the noise from the adjacent facility.
[00:05:16] So you have to be mindful of this.
[00:05:17] You have to be a good neighbor.
[00:05:18] You have to be conscious of this as part of the design process.
[00:05:21] We don't want solar to get a, you know, a black eye, you know, with
[00:05:25] the very communities that we want to serve.
[00:05:27] Yeah, that's great.
[00:05:28] Moving on to number two, right?
[00:05:29] So we're talking about noise pollution.
[00:05:31] Now let's talk about efficiencies.
[00:05:33] And when you were talking to me about this earlier, even efficiencies
[00:05:36] of a fraction of a percent is significant, right?
[00:05:39] So talk to us a little bit about that.
[00:05:40] Yeah.
[00:05:40] So efficiency of the inverter basically means how much of the DC
[00:05:44] energy gets converted into usable AC energy, right?
[00:05:47] And how much of it is lost as waste mostly heat through
[00:05:53] the power conversion process.
[00:05:54] It's a very important metric for a couple of reasons.
[00:05:57] One is that a less efficient inverter will generate more heat and heat
[00:06:00] is the most damaging long-term to the reliability of any power
[00:06:05] electronics component is its heat.
[00:06:07] That's what kills power electronics and electronics in general.
[00:06:10] So anything that's got higher, higher losses, lower efficiency is going
[00:06:14] to over time, you know, have a impact on the longevity of the
[00:06:18] components inside that device.
[00:06:19] But that's kind of secondary.
[00:06:21] The bigger concern for project donors is yield.
[00:06:24] How much energy are they going to actually be going to be able to
[00:06:27] convert and into usable, sellable energy at the meter with the,
[00:06:32] with at their point of common coupling.
[00:06:34] And so inverter efficiency is by far the biggest, biggest impact there.
[00:06:38] A half a point of efficiency differential between one inverter
[00:06:43] versus another inverter can add up to 300 to $350 per year,
[00:06:48] per megawatt for the project.
[00:06:50] So when you start talking larger projects, this starts to
[00:06:52] add up very fairly quickly.
[00:06:54] You know, it's one a hundred megawatt project.
[00:06:56] You're now talking, you know, $30,000 a year.
[00:06:58] So this starts to add up as to how much energy you're going to be able
[00:07:02] to harvest and, and, you know, turn that into revenue for your project
[00:07:06] and cover the cost of the assets that you've put into service.
[00:07:09] So there are most of the inverters that are out there.
[00:07:13] They, they are fairly common for them to have a 98 and a half percent
[00:07:17] efficiency, which sounds really good.
[00:07:19] You know, the inverters that Siemens puts into the market, both our
[00:07:22] string and our central inverters are 99% efficiency per CEC.
[00:07:26] And the CEC efficiency metric is one that's done across
[00:07:29] the spectrum of operation.
[00:07:31] So it's basically measurement that's done at 10, 20, 30, 40, 50, all
[00:07:35] the way up to a hundred percent output power.
[00:07:37] And then they take the blended average of that to come up with
[00:07:39] the CEC efficiency rating on the units.
[00:07:42] Got it.
[00:07:43] And you have studies that show this.
[00:07:44] We'll include those in the, in the show notes, by the way, if anyone's
[00:07:47] interested, you want to download that and have a look at it.
[00:07:49] So inverter efficiency is super important.
[00:07:51] Third one on the list here is MTBF, specifically design complexity.
[00:07:55] Talk to us a little bit about that.
[00:07:57] Sure.
[00:07:57] So, so when we look at any power electronics device, we kind of,
[00:08:01] one of the things that we look at is minimizing parts count, right?
[00:08:04] How many different components are there in the unit?
[00:08:06] Because if we can reduce the number of components, we will reduce
[00:08:10] the meantime between failures in general, right?
[00:08:12] So we want, we try to simplify designs to the greatest extent possible.
[00:08:16] Now, some of the products that are on the market, they include an extra
[00:08:20] power conversion stage.
[00:08:21] They're called multi MPPT units, right?
[00:08:23] So they actually convert the DC power coming in from the array
[00:08:27] that's typically coming in at up to 1500 volts DC and they have a boost.
[00:08:32] So they increase the voltage level on the DC to a higher level before
[00:08:37] the primary power conversion stage that turns it into AC.
[00:08:40] So they boost the DC to a higher level first, and then they push
[00:08:43] it through the main body of the inverter to output to a, to a
[00:08:48] higher voltage level on the AC side.
[00:08:50] The challenge there is that you've got this extra DC to DC boost stage,
[00:08:54] and you've got multiples of them.
[00:08:55] So on a typical multi MPPT inverter, you could have 12 to 16 or even
[00:09:01] higher channels of these boost stages.
[00:09:04] So that means there's 12 to 16 sets of these DC to DC boost
[00:09:08] converters inside the unit, which increases the parts count, which
[00:09:12] frankly, in my opinion, gives you a weak spot from a reliability perspective.
[00:09:16] So if any of those components fail inside one of those boost stages, it
[00:09:20] potentially takes your entire inverter down.
[00:09:22] So we always think about simplification of designs and our units are a
[00:09:27] single MPPT design, but what we've also discovered is that that adds to
[00:09:32] the efficiency, but it also adds to the reliability of the unit.
[00:09:35] So we get higher efficiency because that extra boost stage, there's
[00:09:38] losses associated with that, which is why you see lower efficiencies
[00:09:42] in the first place.
[00:09:43] So it ties back to point two, right?
[00:09:45] We already talked about the overall efficiency, but it also potentially
[00:09:48] creates a reliability weakness in the design.
[00:09:51] The other thing I would mention about the multi MPPT units is that they
[00:09:57] are touted by the people that sell them as being generating higher yields
[00:10:01] for your project because they deal with what I call corner cases where
[00:10:06] you might have uneven levels of soiling or dirtiness on the modules
[00:10:11] from different parts of the array.
[00:10:12] And they say, well, if there's a mismatch between the module strings
[00:10:15] for some reason, whether that be because of the length of the strings,
[00:10:19] the number of modules in the string, which is unusual.
[00:10:22] You usually wouldn't have different string lengths on a utility
[00:10:24] scale project on rooftops.
[00:10:26] Sometimes you do, but on utility scale, they're typically homogeneous.
[00:10:29] They're always the same number of modules in a string.
[00:10:32] But if you had soiling mismatch, if you had rapid cloud movement
[00:10:36] moving overhead where part of the array might be shaded while the
[00:10:39] other is not, there are instances there where you can get a higher
[00:10:44] yield with these multi MPPT inverters because each channel is maximizing
[00:10:48] the power output by adjusting the voltage on the channel.
[00:10:51] However, those use cases are so infrequent that they actually occur
[00:10:55] in real life that don't make up for the half a percent efficiency
[00:11:00] penalty that you take just by having that extra boost stage in there.
[00:11:03] So we had commissioned the Fraunhofer Institute, which is a widely
[00:11:07] regarded German research group, to actually look at these multi MPPT
[00:11:12] versus single MPPT inverters a couple of years ago.
[00:11:15] And their conclusion essentially was that there's no real advantage
[00:11:19] in utility scale projects.
[00:11:21] There is no real advantage to having multi MPPT and that penalty
[00:11:25] from the efficiency perspective more than cancels out any benefit
[00:11:29] you get from those corner cases.
[00:11:31] Interesting.
[00:11:32] So more of a theoretical benefit, but for all practical purposes,
[00:11:35] you're not going to see it.
[00:11:36] Yeah, if you're designing rooftop arrays and there's issues with shading,
[00:11:40] right, this is the other thing that they bring up.
[00:11:43] It's like, well, what about shading from trees?
[00:11:45] Well, if you've designed a utility scale project properly,
[00:11:48] you've kept the perimeter away from the trees, right?
[00:11:51] You know, what about inter-row shading where the beginning
[00:11:54] or at the end of the day, the rows shade each other.
[00:11:56] At the bottom, the row is shaded by the other row adjacent to it.
[00:11:59] Again, if you've designed your project properly,
[00:12:02] you have left enough space between the rows.
[00:12:04] So that shouldn't be an issue.
[00:12:05] On rooftops where you've got a limited amount of space that you're working with,
[00:12:09] sometimes you do crowd the arrays a little bit.
[00:12:11] Sometimes you have to work close to a rooftop obstruction,
[00:12:14] like an air handling unit that for part of the day is going to cast
[00:12:18] some shade over a nearby module.
[00:12:19] In those instances, I think multi MPPT makes sense.
[00:12:23] But for utility scale applications, we just don't see the value
[00:12:26] of the multi MPPT in terms of yield increment.
[00:12:29] All right.
[00:12:29] Let's move on to number four.
[00:12:31] We'll keep hitting these here.
[00:12:33] The ecosystem performance ratio and CAPEX.
[00:12:35] Talk to us about that.
[00:12:36] Yeah, so we like to look at just not an inverter to inverter
[00:12:41] cost differential, right?
[00:12:42] So we have these single MPPT inverters and often people say,
[00:12:46] well, they're kind of small, right?
[00:12:47] They're 125, 155, 165 kilowatt units.
[00:12:52] There are string inverters on the market that are 250, 255, 350, 333.
[00:13:00] So there's bigger units on the market.
[00:13:01] And the argument as well, if I use bigger units, I need less of them.
[00:13:04] My install cost is going to be lower, which makes sense when you think
[00:13:08] about it initially, but you have to look at the total ecosystem
[00:13:11] cost of the system that you're putting together, right?
[00:13:14] So that includes the installation costs, the hardware costs,
[00:13:18] the cabling costs, because with these larger units, they tend
[00:13:25] to have their outputs at 800 volts AC and they are made for
[00:13:30] distributed architecture deployment, which means you mount them at the end
[00:13:34] of the row and then you have 800 volt AC three-phase wiring that has to run
[00:13:40] underground back to wherever your step up transformer is, all right?
[00:13:44] Versus a what we call a virtual center or central or consolidated
[00:13:49] architecture where all the inverters are clustered together in close
[00:13:53] proximity to the inverter.
[00:13:55] The home run cabling from the array is done at 1500 volts DC.
[00:13:59] So it means you can use smaller conductors.
[00:14:01] You only need two of them, not three, right?
[00:14:03] Smaller conductors, lower losses on those conductors.
[00:14:07] So that's going to affect the performance ratio of the total installation, right?
[00:14:11] And it's going to have some cost implications.
[00:14:14] The other impact is that with 800 volts AC, you need specialty switch gear, right?
[00:14:19] Normal switch gear, normal UL equipment is maximum 600 volts AC.
[00:14:24] So if you're doing an 800 volt output on your inverters, now you need either
[00:14:28] to use fuse disconnect switches or breakers that are rated for a minimum 800 volts.
[00:14:34] Typically, they're then rated for a thousand volts.
[00:14:36] There's very limited options there in terms of OEMs that have a UL approved
[00:14:40] product for a breaker for a thousand volts AC, right?
[00:14:43] So you're limiting your options.
[00:14:45] Your cost of switch gear is going to be higher on the AC side.
[00:14:48] So you have to look at the entire ecosystem.
[00:14:51] So what we do for people is we say, okay, yes, you know, my inverter
[00:14:55] might be a half a penny more expensive than the other guy's inverter.
[00:14:58] And I still maybe need a DC disconnect, but I am compatible with a fused
[00:15:03] cable trunking system, which is going to save you a penny a watt if you deploy
[00:15:06] that type of solution on your wiring costs on the DC side.
[00:15:10] Whereas the other guys, you have to bring individual string
[00:15:13] wiring and terminate it at their inverter, right?
[00:15:16] So there's a cost differential there, right?
[00:15:18] You have to field install their inverters at end of row, which
[00:15:22] is going to cost you time and money.
[00:15:24] And that's at field labor rates, right?
[00:15:26] Whereas I will build you an inverter rack with all the inverters mounted on a rack
[00:15:30] with AC paralleling switch gear that's already pre-wired to it.
[00:15:34] So all that wiring is already done for you and you just set it next to the transformer.
[00:15:39] And so you wire it much the same way as you do a central inverter.
[00:15:42] You have to look at the entire ecosystem architecture in terms of its
[00:15:47] CapEx for deployment completely installed.
[00:15:49] But then the other one is the performance ratio because of that,
[00:15:53] those cable losses on that 800 volts AC system, you're going to typically see a half
[00:15:58] a percent lower performance ratio just because of the cable losses.
[00:16:03] You couple that on top of the half a percent efficiency
[00:16:06] difference with the inverters.
[00:16:07] Now you've got a 1% performance ratio differential between the two
[00:16:11] designs that you're deploying.
[00:16:13] Again, that adds up to money in the bank because you're generating and selling
[00:16:17] more electricity onto the grid with a higher performance ratio.
[00:16:20] Well, I think it also impacts your inventory.
[00:16:22] Whoever owns that facility, if you've got 800 volts switch gear,
[00:16:27] if you've got spares or things like that, you have to place those in your stock.
[00:16:31] There's carrying costs associated with that.
[00:16:33] You can't just use that anywhere.
[00:16:35] So there's some issues with that as well.
[00:16:36] And I think to your point, it's looking at the total ownership cost of the
[00:16:40] entire project versus getting transactional with each component.
[00:16:44] And if you do get transactional, then there's other issues to your point
[00:16:48] about the efficiency.
[00:16:50] So I agree.
[00:16:51] We have the same discussions on other products or other solutions that we sell.
[00:16:56] And you got to get people to realize that every action, there's a
[00:16:59] reaction and it impacts your entire project.
[00:17:02] Oh yeah.
[00:17:02] There's definitely an O&M impact.
[00:17:04] Right?
[00:17:04] So if you go the path of saying, well, okay, I'm not going to use
[00:17:07] those thousand-volt breakers, I'm going to go with fused switch gear,
[00:17:10] fused disconnect type switch gear.
[00:17:12] And one of our OEM competitors has a product specifically for solar where
[00:17:15] they'll do a switchboard with fused disconnect.
[00:17:19] The problem with fuses is if there's a problem with the inverter and it
[00:17:23] causes an inrush current or a short circuit current, you've got a fuse blow.
[00:17:28] So now you've got a consumable that you have to deal with.
[00:17:30] And when I went and looked at the design, they don't have a main
[00:17:33] disconnect switch in that switchboard.
[00:17:36] It's just feeders.
[00:17:37] And I'm like, okay, so that means I've got to turn off the transformer
[00:17:40] that it's connected to on the primary side in order to go in and change
[00:17:44] a fuse, like, holy cow, that's a nuisance.
[00:17:47] I am not doing that anytime soon.
[00:17:49] Right?
[00:17:49] So you have to look at the O&M implications of your design as well,
[00:17:53] because they can come back and bite you.
[00:17:55] Right?
[00:17:56] And unfortunately, the procurement guys don't always talk with
[00:18:00] the O&M people, right?
[00:18:01] They're focused on cost.
[00:18:02] Their metrics are driven off of first capex cost.
[00:18:05] And solar is highly capex driven because there's no fuel
[00:18:08] cost on these projects, right?
[00:18:10] The sunshine is free, at least for now.
[00:18:12] Nobody's figured out how to tax sunshine yet.
[00:18:14] Let's give them some time.
[00:18:15] Good happen.
[00:18:16] Right?
[00:18:17] If they can tax carbon, they can certainly tax sunshine.
[00:18:20] So let's not hold our breath there.
[00:18:22] Now don't give them any ideas.
[00:18:25] I don't want to.
[00:18:25] I'm sure they've already thought about it.
[00:18:27] But this is a consideration that we have to take into account
[00:18:32] is that O&M element of it too.
[00:18:34] Great point.
[00:18:35] Next one you have here is grid standards.
[00:18:38] Let's go to that one.
[00:18:38] Sure.
[00:18:39] So grid standards are evolving.
[00:18:42] They always have.
[00:18:43] California has been the leader for the longest time in adopting
[00:18:49] new and more stringent grid standards, primarily because
[00:18:52] they're seeing higher levels of penetration of renewables
[00:18:55] on their grid.
[00:18:56] And with higher levels of penetration come challenges,
[00:18:59] right?
[00:18:59] Challenges with frequency and voltage regulation,
[00:19:03] challenges with dealing with the duck curve, which drove
[00:19:06] the requirement for storage implementation in California
[00:19:10] faster than it did anywhere else in the country.
[00:19:12] But we're very quickly seeing a shift.
[00:19:14] Texas for the last couple of years has been the biggest
[00:19:18] place for new installations, especially for larger
[00:19:21] utility scale projects.
[00:19:22] It's the number one state for the last couple of years
[00:19:24] for solar deployments.
[00:19:26] So there's a shift there.
[00:19:27] So ERCOT standards have become kind of the new de facto
[00:19:31] standard, USB Cal ISO was what you had to deal with.
[00:19:33] Now it's become ERCOT and there's the standard that
[00:19:36] governs inverters is UL 1741.
[00:19:39] It's been out for a long time since I've been in the
[00:19:41] industry. It's existed.
[00:19:43] And I got in the industry in 2008, but it's been amended
[00:19:47] every couple of years.
[00:19:48] There's new adoptions of new rules.
[00:19:50] They had the supplement A that was adopted.
[00:19:53] Now we're in supplement B adoption.
[00:19:56] We're starting to see jurisdictions requiring the
[00:19:59] SB certification, supplement B certification.
[00:20:03] We've also seen changes in the modeling requirements,
[00:20:07] the dynamic modeling requirements for the inverter.
[00:20:10] So we have to have PV-SYST models, obviously, so that
[00:20:14] we can model yield.
[00:20:15] But we also have to have the dynamic models, PSCAD,
[00:20:19] PSSE, PSLF for the inverters and different utilities
[00:20:24] have started to adopt changes to what they require
[00:20:27] from the inverter model.
[00:20:28] So we've had to make amendments to our models,
[00:20:31] hire specialty software companies to remodel the
[00:20:35] units to be able to deal with the requirements of
[00:20:38] interconnection applications that our customers are seeing.
[00:20:41] So the most stringent one we've seen, for example,
[00:20:44] is unusually it's in the state of Maine.
[00:20:46] So we had to come up with an amended model for
[00:20:50] inverters about a year ago just to deal with
[00:20:53] the requirements for the state of Maine.
[00:20:54] So this is something you have to understand when
[00:20:57] you're doing a project.
[00:20:58] What are the interconnection requirements?
[00:21:00] What am I going to have to be complying with
[00:21:02] with the frequency and voltage ride through
[00:21:05] capabilities of the units?
[00:21:06] What other requirements are there?
[00:21:08] And then I think the last one that's still not quite
[00:21:11] fully baked is cybersecurity, right?
[00:21:14] What cybersecurity rules may be implemented still
[00:21:18] by NERC and FERC that we haven't yet got full
[00:21:22] coverage on.
[00:21:22] I think that's going to be the next frontier
[00:21:25] in terms of requirements.
[00:21:26] As we increase the level of adoption of
[00:21:29] distributed energy resources, of large scale solar,
[00:21:32] it becomes a concern that these resources are
[00:21:35] susceptible to foreign actors hacking into them.
[00:21:38] And Christopher Wray of the CIA has testified
[00:21:41] before Congress a couple of times in the last
[00:21:43] three months about his concern over infrastructure
[00:21:46] weaknesses in the U.S. and cybersecurity
[00:21:48] weaknesses specifically on infrastructure, on water,
[00:21:52] on power plants.
[00:21:53] And this is a concern I think that we see it
[00:21:56] taken more seriously by the investor-owned
[00:21:59] utilities that we work with than by the IPPs.
[00:22:03] The independent power producers are aware of
[00:22:05] cybersecurity concerns, but I think they are less
[00:22:08] focused on them because they don't answer to anyone.
[00:22:11] An IOU answers to a public utilities commission.
[00:22:13] If one of their power plants was hacked and shut down
[00:22:17] and it impacted grid reliability, caused a brown out
[00:22:20] or worse, a blackout, they would have to answer
[00:22:23] to the PUCs.
[00:22:24] The IPPs don't.
[00:22:25] They answer to the investors.
[00:22:26] And so I think that's why there's less of a focus
[00:22:28] there, but I think that will change over time.
[00:22:32] And all it takes is one event for it to change.
[00:22:35] And the world we live in is not stable,
[00:22:38] as we've seen over the last couple of years.
[00:22:40] Wars break out at a moment's notice and we have
[00:22:45] to be cognizant of the risks to our infrastructure.
[00:22:47] And I view solar in general and solar supply chain
[00:22:52] as a national security issue.
[00:22:54] This is why I think the Inflation Reduction Act
[00:22:57] was a good idea, localization, encouraging localization
[00:23:02] of manufacturing of modules, of inverters,
[00:23:05] of other hardware I think is a good idea
[00:23:07] just because we cannot be sure that our supply chains
[00:23:10] will be intact from one year to the next.
[00:23:13] We must come up with a energy security strategy
[00:23:18] which is long-term.
[00:23:19] That's important stuff.
[00:23:20] I mean, I think that the, you know,
[00:23:22] as solar is not going backwards.
[00:23:24] We're gonna see it be a more and more of a bigger part
[00:23:27] of the overall production of electricity in this country
[00:23:31] and worldwide.
[00:23:32] So you gotta take care of these issues now,
[00:23:34] especially cyber security.
[00:23:36] It's an issue that's only gonna get greater
[00:23:39] and greater as solar is adopted heavy
[00:23:41] and heavier in other parts of the country.
[00:23:43] So, and then we saw, you know,
[00:23:44] to your point about wars, you know,
[00:23:46] we saw in Ukraine, the first thing
[00:23:48] that Russia went for was the electrical grid.
[00:23:51] And if you're gonna bring a nation
[00:23:53] to its knees right out of the gate,
[00:23:55] the electrical grid is a vulnerable place.
[00:23:58] Everything that we have runs on electricity
[00:24:01] and it's getting more and more like that.
[00:24:02] So we gotta protect it and protect it well.
[00:24:05] Agreed, agreed.
[00:24:07] Are you guys seeing how fast, you mentioned,
[00:24:08] I mean to deal with these cyber security threats
[00:24:11] that you guys are talking about
[00:24:12] and even just policy changes like in Maine,
[00:24:15] like you said, how fast are these coming
[00:24:17] down the pipeline?
[00:24:18] How hard is it to kind of manage all these changes,
[00:24:21] all these things, security threats?
[00:24:22] Like how, you know, for Siemens,
[00:24:24] obviously you guys have a lot of resources
[00:24:26] to deal with this kind of stuff.
[00:24:27] How difficult of an issue is it?
[00:24:29] I mean, the standards changes,
[00:24:31] they tend to evolve fairly gradually.
[00:24:34] Like the SB was published two and a half years
[00:24:37] before anyone started implementation.
[00:24:39] So there's plenty of time to ensure
[00:24:42] that the products would meet that.
[00:24:45] When we get a surprise sometimes
[00:24:47] when we suddenly have a local utility
[00:24:49] that implements something that's different
[00:24:51] than the national standards, you know,
[00:24:54] so when Maine implemented a change
[00:24:55] in what they wanted to see for the dynamic modeling,
[00:24:58] okay, that was a bit of a whoops,
[00:25:00] we didn't catch that one early enough.
[00:25:02] We try to participate in various industry associations
[00:25:05] sit on committees to understand what's coming.
[00:25:09] It's difficult though,
[00:25:10] because the grid in the United States
[00:25:12] is a conglomeration of multiple different rule sets.
[00:25:16] There is not a national interconnection standard
[00:25:19] for renewables, you know,
[00:25:20] it's very much a patchwork quilt
[00:25:23] of interconnection standards.
[00:25:24] And so we have to try to stay on top of it.
[00:25:26] So I won't say that we're always in front of it,
[00:25:29] but we try to be as much as possible.
[00:25:31] On the cybersecurity front,
[00:25:33] I think Siemens is got a very good handle on that
[00:25:36] from a couple of perspectives.
[00:25:37] One is that we have a consultation business
[00:25:40] that just helps customers
[00:25:41] with cybersecurity as a service, right?
[00:25:43] So we do cybersecurity as a service within Siemens
[00:25:47] and we'll go into a customer
[00:25:48] and evaluate their IT infrastructure,
[00:25:50] evaluate their file storage methodologies,
[00:25:54] make recommendations to them
[00:25:57] and try to beef up their cybersecurity.
[00:25:59] From a product development perspective,
[00:26:02] we have very specific rules
[00:26:04] which we follow for any IoT product,
[00:26:07] anything that's gonna be networked
[00:26:08] has to go through a certain level
[00:26:11] of cybersecurity testing
[00:26:14] in order to be launched to the marketplace.
[00:26:17] We are also very, very cautious
[00:26:19] about where we get firmware written and by whom, right?
[00:26:22] So this is another thing is,
[00:26:25] it doesn't take much for someone
[00:26:27] to implant malicious code in something.
[00:26:29] So you have to be a little bit cognizant
[00:26:31] of the people that you have working on projects
[00:26:34] and just be very cautious there
[00:26:36] and vet people and make sure that you are
[00:26:39] ensuring that the products are fully tested
[00:26:41] before they go to market.
[00:26:42] Let's talk about number six on the list,
[00:26:44] you know, talk about warranty and bankability
[00:26:47] if you can speak to that.
[00:26:48] Yeah, well, what I always tell people
[00:26:50] that is the five year or longer warranty
[00:26:54] that you're getting from your inverter manufacturer
[00:26:57] and that's the standard in the industry.
[00:26:58] But I tell people that that warranty
[00:27:00] is only good as the company that's standing behind it.
[00:27:02] And unfortunately,
[00:27:04] the inverter manufacturing marketplace
[00:27:07] is that space is littered
[00:27:09] with the rotting carcasses of many companies
[00:27:12] that have gone bankrupt,
[00:27:14] either bankrupt completely
[00:27:16] or decided to exit the US market,
[00:27:19] you know, for strategic reasons
[00:27:20] or sold off their business to another entity
[00:27:23] which then made it impossible
[00:27:24] to get warranty coverage for whatever reason.
[00:27:26] So I could list off probably eight or nine
[00:27:29] or 10 different companies who,
[00:27:32] you know, a decade ago or five years ago
[00:27:34] were big names in inverters
[00:27:37] and they no longer exist today
[00:27:39] and there's no longer any support
[00:27:41] for their products in the market
[00:27:42] or getting support is very, very difficult.
[00:27:45] We are starting to see a lot of projects
[00:27:48] that were deployed seven to 10 years ago
[00:27:51] that are at the stage where they are so frustrated
[00:27:55] with their inability to get support
[00:27:57] that they are considering repowering,
[00:27:59] meaning they'll tear out the existing inverters
[00:28:02] and put something else in to replace them,
[00:28:04] something new.
[00:28:05] That's not how those projects were designed.
[00:28:07] They were typically designed
[00:28:09] with the idea that the inverters would run
[00:28:11] for 15, 20, maybe even 25 years.
[00:28:14] The reality is that they aren't
[00:28:16] and they can't get service.
[00:28:18] They can't get parts,
[00:28:18] they can't get people out there
[00:28:20] that know how to work on the units,
[00:28:21] they can't get replacement units
[00:28:24] if a unit fails catastrophically
[00:28:26] and it's not repairable.
[00:28:28] And that is a real challenge for these assets
[00:28:31] or asset owners
[00:28:32] because they end up having portion of the solar array
[00:28:34] that's essentially stranded.
[00:28:36] It can't get its power back onto the grid
[00:28:38] if there's no inverter in between.
[00:28:39] It's a challenge,
[00:28:40] it's something that I caution people
[00:28:42] and bankability in solar basically means,
[00:28:45] is that company gonna be around
[00:28:47] for the duration of the warranty?
[00:28:49] Are they gonna stand behind the product?
[00:28:50] Do they have a obsolescence plan?
[00:28:53] So when products do go obsolete
[00:28:55] because they inevitably do,
[00:28:56] how long will they support that product
[00:28:58] with parts and service and personnel after the fact?
[00:29:02] I mean, we're supporting products
[00:29:03] that Siemens deployed back in 2006, 2007.
[00:29:07] We're still supporting those.
[00:29:08] It's not easy, but we're still supporting them.
[00:29:11] We have products that were deployed in the 2015-17 range
[00:29:14] that we're supporting,
[00:29:16] that are obsolete and have been since probably 2018.
[00:29:19] But we're still supporting those products
[00:29:21] and we have parts, we have service,
[00:29:23] we have personnel that are trained on them.
[00:29:25] We've also trained our customers
[00:29:27] on how to be self-sufficient to a large degree.
[00:29:30] We're doing what we can there.
[00:29:31] So ask the questions,
[00:29:33] where are you going to do warranty support?
[00:29:35] Where are the spare parts held?
[00:29:37] Where are spare units retained?
[00:29:39] How many spare units do you keep in stock
[00:29:42] as a percentage of the deployed fleet
[00:29:44] of units that you have?
[00:29:46] Because with string inverters,
[00:29:48] there's only a couple of things that get done
[00:29:50] from an O&M perspective on the units in the field.
[00:29:54] Most of the failures involve an RMA swap,
[00:29:57] meaning the unit comes back to a repair center
[00:30:00] and a new unit is deployed and installed
[00:30:03] and put into service.
[00:30:05] So you have to understand how that's going to be
[00:30:06] supported by the OEM you're working with.
[00:30:08] This is an important point.
[00:30:10] Manufacturers globally look at solar
[00:30:12] as a gold rush for them.
[00:30:15] So you got people who really aren't players
[00:30:17] in this field, all of a sudden they are players.
[00:30:20] They're warranting stuff for five years
[00:30:23] and they've even been in business for five years.
[00:30:24] We saw this on LED lighting
[00:30:26] when the transition from HID lighting to LED lighting
[00:30:30] when most of the time there's a 10-year warranty
[00:30:32] with these tight fixtures.
[00:30:34] There were companies giving 10-year warranties
[00:30:36] that had only been in business for a year.
[00:30:38] And now there's a lot of customers
[00:30:40] having to pick up the pieces
[00:30:41] because there's nobody there to support it.
[00:30:42] So having a name like Siemens backing it,
[00:30:45] knowing that they are in the business,
[00:30:46] they've been in the business
[00:30:47] and they're going to be there when things come up.
[00:30:51] That's important.
[00:30:52] That's an important part of it.
[00:30:54] It's like the old days when I always heard,
[00:30:56] hey, no one ever got fired by buying IBM, right?
[00:30:59] Think a lot of that goes with Siemens.
[00:31:01] Siemens is going to be a player in this space globally.
[00:31:04] Yeah, I agree.
[00:31:05] To number seven too, how easy are,
[00:31:08] is it field maintenance and swaps?
[00:31:10] Like how easy is to do this thing?
[00:31:11] So let's maybe move into that.
[00:31:12] Yeah, so on our string inverters that we deploy,
[00:31:15] there's only a couple of field replaceable items
[00:31:18] and we made them real simple to replace.
[00:31:20] They are the fans in the unit.
[00:31:22] So they're an air-cooled inverter
[00:31:24] and they have three sort of square fans
[00:31:27] that are about, I don't know, four inches square.
[00:31:29] With one tool in about five minutes,
[00:31:31] I could replace all three fans if I needed to
[00:31:34] if there was a failure.
[00:31:35] So basically it's an Allen key, pop open a cover
[00:31:38] and then the fans themselves aren't even bolted in place.
[00:31:40] They use a twist lock mechanism into the sheet metal.
[00:31:43] So they just twist out, pop them.
[00:31:45] There's a quick multi-wire connector
[00:31:47] and then you snap a new one in,
[00:31:48] boom, you're back up and running again.
[00:31:50] That's one of the field replaceable items.
[00:31:52] We've got a video online that shows how that's done
[00:31:54] and how easy it is.
[00:31:55] The other consumable item is search protectors, right?
[00:31:57] So we have search protectors on the AC, DC side,
[00:32:00] can also add them as an option
[00:32:02] on the communication line incoming to the units.
[00:32:05] And those are all using socket connectors.
[00:32:07] So they're the field replaceable style SPDs
[00:32:11] are not hard-soldered into position
[00:32:13] on the printed circuit board.
[00:32:14] So there's a socket, they pop in and out
[00:32:16] and they also have an indicator on them
[00:32:17] that tells you when that SPD has taken enough
[00:32:20] voltage transients that it's failed, right?
[00:32:22] So there's a visual indicator on that unit
[00:32:24] that tells you if it needs replacing.
[00:32:26] So those are kind of the two field replaceable items
[00:32:28] that we've traditionally done.
[00:32:29] We're now migrating a little bit
[00:32:31] where we've got a couple of the printed circuit boards
[00:32:34] that we will do a swap on.
[00:32:36] If we can isolate the problem through troubleshooting
[00:32:39] we'll authorize a swap of a PCB in the field.
[00:32:43] It's a little more tricky to do
[00:32:44] because of you're working outside,
[00:32:46] you gotta make sure it's not raining when you do it,
[00:32:49] that you're wearing anti-static protective gloves,
[00:32:52] et cetera, right?
[00:32:53] So you have to be careful
[00:32:54] when you're handing a PCB like that.
[00:32:56] So there's some extra precautions that have to be taken.
[00:32:59] And then any other swap is basically an RMA swap,
[00:33:02] meaning you remove the AC and DC cable connections
[00:33:06] to the inverter, you pop it off its mounting bracket
[00:33:08] and you ship it back to us
[00:33:10] and you replace it with a spare unit.
[00:33:12] And a lot of customers will keep a spare on site.
[00:33:15] If not, we typically can ship a spare out
[00:33:17] within 48 hours of getting a notification
[00:33:20] that one is required.
[00:33:21] And we have a call center where people call in.
[00:33:25] They can also log a case through a web portal.
[00:33:27] We answer their calls.
[00:33:28] We try to troubleshoot the unit with them.
[00:33:30] If it can't be got up and running again,
[00:33:32] just through some troubleshooting steps,
[00:33:34] then we'll authorize that RMA swap.
[00:33:35] The other thing is how heavy is the unit itself?
[00:33:39] The units that we deploy, these 125, 155 KW units,
[00:33:42] they weigh less than 80 kilograms.
[00:33:44] So two people can, with a little bit of effort,
[00:33:47] but two people can lift one off the wall
[00:33:49] and set it down and pop a new one on
[00:33:51] on its mounting bracket.
[00:33:53] So they're just under that weight threshold
[00:33:56] where two people can comfortably do it.
[00:33:57] Anything bigger than that is really going to require
[00:34:00] some kind of a lift assist device.
[00:34:01] And when you look at some of our competitors products,
[00:34:04] these 250, 350 KW units, they weigh north of 240,
[00:34:10] 250 pounds, just too heavy for two people to lift.
[00:34:12] Can't be done.
[00:34:13] You can't really get a third person in there.
[00:34:16] It's not really conducive to that to do a lift.
[00:34:18] So you're gonna require some kind of sling lift
[00:34:21] assist device to get it dismounted and swapped out.
[00:34:24] So that's another consideration to think about
[00:34:26] on the O&M side is how easy is it to field repair
[00:34:30] or field replace a unit when a problem does occur?
[00:34:33] Because problems will always occur, right?
[00:34:35] All products, regardless of how well they're designed
[00:34:38] will have field problems,
[00:34:40] but you have to be mindful of that.
[00:34:41] Got it.
[00:34:42] And so, and then especially talking about
[00:34:44] utility scale, things like that.
[00:34:45] Number eight you have here is scalability
[00:34:48] and flexibility.
[00:34:49] So what should people think about
[00:34:51] when they're thinking about that topic?
[00:34:53] Sure.
[00:34:54] So a lot of the target market for string inverters
[00:34:57] and utility scale is definitely the community solar space,
[00:34:59] the one to five megawatt,
[00:35:00] but we do see people deploy them
[00:35:02] on larger projects as well.
[00:35:03] And one of the reasons is that
[00:35:05] scalability and flexibility.
[00:35:06] So because of the way we do it,
[00:35:08] where we mount the inverters on racks
[00:35:10] with paralleling switch gear
[00:35:11] and then close couple to a step transformer,
[00:35:13] we can make a block size of any size really, right?
[00:35:16] So depending on how many inverters we rack
[00:35:18] and the size of the transformer,
[00:35:20] we can adjust that from one megawatt, two, three, four,
[00:35:23] all the way up to five megawatt block sizes
[00:35:25] are relatively easy for us to deploy.
[00:35:27] So that gives you flexibility
[00:35:30] when you have unusual topologies
[00:35:33] of the site that you're working with
[00:35:34] where they can't cut it up into nice,
[00:35:36] regular rectangular DC size blocks.
[00:35:39] If you have irregular DC blocks,
[00:35:40] it means that you're gonna have irregular AC block
[00:35:43] and the string inverters give you that flexibility.
[00:35:45] Other thing I always tell people is,
[00:35:48] make sure that if you've got a point of interconnection,
[00:35:52] maximum power rating that you can't exceed
[00:35:56] with the utility as part of unit connection agreement,
[00:35:59] it may be sometimes necessary
[00:36:00] to have the ability to derate an inverter, right?
[00:36:03] So you add all the inverters up,
[00:36:04] you're using the 155s and without derating,
[00:36:07] you're just over the five megawatt threshold.
[00:36:09] While you can take one unit and hard program it,
[00:36:12] our commissioning guys will do it behind a password
[00:36:14] that only our guys have,
[00:36:16] and we'll write you a letter
[00:36:17] to the effect that it's been derated.
[00:36:18] So that one unit's derated to 140 kilowatts.
[00:36:21] It'll never output more than that.
[00:36:22] And by doing that,
[00:36:24] we can ensure that you meet your limitation requirements
[00:36:28] at the point of common coupling with the utility
[00:36:30] for your interconnection agreement.
[00:36:31] So this is another flexibility thing
[00:36:33] that you have to be mindful of
[00:36:34] that sometimes you have an unusual requirement
[00:36:38] from the utility.
[00:36:40] How are you going to deal with that?
[00:36:41] How's the OEM gonna help you get there?
[00:36:43] All right, well, let's talk about
[00:36:45] installed base and history number nine.
[00:36:47] Sure.
[00:36:47] So the other thing I tell people is,
[00:36:50] don't buy serial number one,
[00:36:51] or frankly don't buy serial number 100
[00:36:54] from a new product that hits the market.
[00:36:56] Almost every inverter product that I've ever seen
[00:37:01] hit the market in the U.S.
[00:37:03] has had issues with the first installed units.
[00:37:06] There's always some bugs to get ironed out, right?
[00:37:08] You wanna be mindful of that.
[00:37:09] A couple of years ago,
[00:37:10] people were all hot on 250 kilowatt string inverters
[00:37:14] were hitting the market in droves
[00:37:17] from a couple of competitors.
[00:37:19] At least two of those competitors
[00:37:20] had to withdraw that product from the market
[00:37:22] and go through a redesign process
[00:37:23] because they had some significant problems
[00:37:26] when they were fielded.
[00:37:27] They were having catastrophic failures,
[00:37:29] they were having covers blow off,
[00:37:31] they were having interconnection requirement issues.
[00:37:35] There was multiple problems
[00:37:37] that I heard from multiple different EPCs
[00:37:39] and developers that had tried to deploy
[00:37:41] those first units.
[00:37:43] So be mindful of that.
[00:37:44] Just get some information from your OEM.
[00:37:47] How many are installed in the U.S.?
[00:37:49] What customers are using them?
[00:37:51] What's their experience been like?
[00:37:52] See if you can't get the name of a contact
[00:37:56] from one of those references,
[00:37:59] talk to them,
[00:38:00] see how they feel about the support they've been getting,
[00:38:02] how the installation went,
[00:38:04] how the commissioning process was,
[00:38:07] how the SCADA implementation worked on the units, right?
[00:38:11] So just make sure that you're doing your homework
[00:38:13] on any product that you're fielding
[00:38:15] and just be a little bit leery
[00:38:17] about being the first customer to deploy
[00:38:19] a brand new product in the marketplace.
[00:38:21] It's always challenging when you launch a new product,
[00:38:24] there are always issues,
[00:38:26] but how the OEM deals with those issues can mitigate,
[00:38:29] but you also wanna be a little bit cautious.
[00:38:31] It goes back to the bankability.
[00:38:33] I think it ties right back into
[00:38:34] what we were talking about before.
[00:38:35] It does.
[00:38:36] Make sure you're partnering with a partner
[00:38:38] that's gonna be there in the end.
[00:38:40] Yep, all right, last one we have here,
[00:38:42] domestic content implications.
[00:38:43] So let's do that one. Sure.
[00:38:46] Yeah, so this, I mean, this is a big one
[00:38:47] since the passage of the Inflation Reduction Act.
[00:38:51] There's a bonus 10% tax credit that's available
[00:38:55] if you can hit the domestic content thresholds
[00:38:58] on your project.
[00:38:59] And there's kind of two litmus tests
[00:39:02] that you have to pass.
[00:39:02] One is that your structural steel
[00:39:04] has to be sourced from US suppliers.
[00:39:06] So your racking or your trackers,
[00:39:09] that's a pretty straightforward one.
[00:39:11] The second litmus test is that
[00:39:12] the manufactured products that you use on your projects
[00:39:14] are the inverters, transformers, switch gear,
[00:39:17] all of that stuff.
[00:39:18] You have to hit a content threshold
[00:39:20] of US content on those components.
[00:39:22] And the threshold for projects commencing construction
[00:39:25] this year is 40%.
[00:39:27] It goes up 5% a year based on commencement date
[00:39:30] until it caps out at 55% in a few years.
[00:39:33] And then that'll be the maximum level that's required.
[00:39:36] The challenge right now is that you would think
[00:39:39] the easiest way to do that
[00:39:40] would be with US sourced solar modules.
[00:39:43] Okay, that's the great idea
[00:39:45] because this solar module accounts for 40 to 50%
[00:39:48] of your project cost on the capex side
[00:39:50] for the manufactured components anyway.
[00:39:52] So if you could source a US module, wonderful.
[00:39:55] But even a US manufactured module
[00:39:58] does not necessarily constitute 100% US content.
[00:40:02] So what they actually have to do as a module manufacturer
[00:40:05] is declare the source of the raw material.
[00:40:07] So the glass, the aluminum frame,
[00:40:09] the cells or the thin film,
[00:40:12] if it's a thin film module,
[00:40:14] where are those manufactured?
[00:40:16] The back sheet, the encapsulate layer, the junction box,
[00:40:19] all of those components,
[00:40:20] they have to declare where those are coming from.
[00:40:23] And they get to only count the items
[00:40:25] that are from US sub suppliers
[00:40:27] or if they're vertically integrated and doing it in house,
[00:40:30] great, that works too.
[00:40:31] Plus their direct labor.
[00:40:33] So it's a cost basis driven thing
[00:40:35] of material and direct labor
[00:40:36] but they have to actually declare the content levels
[00:40:38] of the different components.
[00:40:40] So right now, I mean, you can buy modules
[00:40:42] from the one thin film guy in the US.
[00:40:44] They've probably got a very high content module.
[00:40:46] It's probably 70, 80% US content.
[00:40:48] Maybe that's enough if you're lucky enough
[00:40:50] to be one of the customers that can buy from them
[00:40:53] because they've, my understanding
[00:40:55] is they've basically sold out through 2027
[00:40:57] their US capacity.
[00:40:58] There are also some module manufacturers right now
[00:41:01] who are saying, well, we can give you a module
[00:41:03] that is 20, 25%, somewhere in that range, US content
[00:41:08] because we source the frame,
[00:41:09] we source the junction box,
[00:41:11] maybe the back sheet layer from US suppliers plus the labor.
[00:41:15] So there's a crystalline module manufacturers in the US
[00:41:18] that are at that level.
[00:41:19] There's also one crystalline module company
[00:41:21] that I'm aware of that's told me
[00:41:22] they're in the 40 to 45% level.
[00:41:24] I'm not quite sure how they got there
[00:41:26] but that's what they say.
[00:41:27] So there may be modules that can help you there
[00:41:29] but they won't get you fully to the level of content
[00:41:32] that you need on your project
[00:41:34] for all the manufactured goods that you're ordering.
[00:41:37] So inverters, if you're trying to get
[00:41:39] that content threshold, inverters and the transformers
[00:41:42] that go with them might be an important element
[00:41:45] to help you get over that content threshold
[00:41:47] in order to ensure that you can capture that.
[00:41:50] So we can help you with that.
[00:41:52] The inverters that we're manufacturing
[00:41:53] have a certain level of US content
[00:41:56] that will increase over time as we domesticate more.
[00:41:59] I should mention that we've just opened
[00:42:02] a string inverter manufacturing facility in Wisconsin
[00:42:06] with a contract manufacturing partner.
[00:42:08] Products are starting to roll off the line this month
[00:42:10] in May, we'll be ramping up the full production
[00:42:13] between now and July
[00:42:14] and then we'll be building about 400, 420 units
[00:42:17] per month will be the monthly capacity
[00:42:19] for a single shift there.
[00:42:21] So we're moving very quickly to domesticate it
[00:42:23] and we're going to be increasing the content threshold
[00:42:26] over time on those inverters
[00:42:28] by domesticating the printed circuit boards,
[00:42:30] domesticating the enclosure.
[00:42:32] So over time over the next six to 12 months
[00:42:35] the content level of the inverter itself
[00:42:37] will increase incrementally from the level it's at now
[00:42:41] to eventually be over 50, 55%.
[00:42:45] So that's good.
[00:42:46] That can help you get there.
[00:42:47] We can also work with you
[00:42:49] to source transformers that are made in the US
[00:42:51] if that's necessary to help you get
[00:42:54] over that content hump.
[00:42:55] And then the other thing is that
[00:42:58] when we take our inverters
[00:42:59] and we mount them in the rack structure
[00:43:01] as this virtual central,
[00:43:03] that inverter is then considered from a US factory.
[00:43:07] So it doesn't matter what the content inside the inverter
[00:43:10] is it becomes a sub-component
[00:43:12] of the new manufactured product, the rack
[00:43:14] as well as the panel board.
[00:43:15] So the AC paralleling panel board
[00:43:17] that we mount on there is coming from a US facility.
[00:43:20] So when we do that
[00:43:22] we believe that we can declare that rack structure
[00:43:25] as 95% US content today.
[00:43:28] We have presented that case
[00:43:29] to the US department of treasury
[00:43:33] as to why we believe that's the interpretation
[00:43:35] of the rules or waiting on a final, final dispensation
[00:43:39] and ruling on that.
[00:43:40] There's more guidance still pending from treasury
[00:43:43] on the rules around manufactured products
[00:43:46] but we have made that case.
[00:43:47] A similar case has been made
[00:43:49] by some of the tracker companies
[00:43:51] as to some of the components that they sell
[00:43:53] that are considered manufactured products.
[00:43:56] So we're kind of waiting on treasury's final ruling
[00:43:59] but we believe that this is gonna be a pathway
[00:44:02] to help our customers significantly get
[00:44:04] to that US content threshold on their projects
[00:44:06] when they can't get modules alone
[00:44:09] that will get them there.
[00:44:10] So it's a complicated subject.
[00:44:13] It's a subject which is still not quite fully baked
[00:44:16] because the final rules are not out
[00:44:21] but it's a subject that we watch very closely
[00:44:23] and we have our government affairs people
[00:44:27] in Washington lobbying on our behalf
[00:44:29] to hopefully get the ruling that we would like to see there.
[00:44:33] Yeah, complicated stuff but lots of savings to be had
[00:44:36] if you can do it right.
[00:44:37] I mean, let's think about it.
[00:44:39] If you're building a hundred megawatt project
[00:44:41] 10% is another $10 million in your pocket.
[00:44:44] That can make or break the economics
[00:44:45] on a project very easily and it's scalable.
[00:44:48] If it's a 10 megawatt project
[00:44:50] it's a million dollars extra in your pocket
[00:44:51] in tax credits.
[00:44:52] So these things are huge
[00:44:55] and will really drive the adoption.
[00:44:58] And part of the argument we made with Treasury is look
[00:45:01] the steel structure that we're building this rack
[00:45:03] is all US steel.
[00:45:04] The other components are coming from US factories.
[00:45:07] The intent of the legislation was to create US jobs
[00:45:10] and we're doing that, right?
[00:45:11] We're building the panel boards in the US.
[00:45:12] We're building the inverters in the US.
[00:45:13] We're building the racks in the US.
[00:45:15] We're creating jobs to drive this solar supply chain
[00:45:19] in the right direction.
[00:45:19] And we are as time permits
[00:45:22] increasing the content levels of the inverters
[00:45:25] but we can't do it overnight
[00:45:26] because a lot of the changes that we make
[00:45:29] to the supply chain trigger us
[00:45:31] to have to recertify the product, right?
[00:45:33] We have to go back through UL
[00:45:35] and get the product retested, recertified
[00:45:37] whenever we change anything in the electrical circuit
[00:45:40] that has implications on our UL listing.
[00:45:42] So it's complicated.
[00:45:44] It can't be done instantly.
[00:45:46] We're doing it as fast as we can.
[00:45:47] We're asking for a little bit of leeway here
[00:45:49] in the rules interpretation.
[00:45:51] Perfect.
[00:45:52] Lots of really good information.
[00:45:53] I think people are gonna benefit from this.
[00:45:55] Let's hit the bonus before we close off that you had,
[00:45:59] moving into what's the threshold
[00:46:01] between smaller ledger projects,
[00:46:03] string inverters to central inverters.
[00:46:06] I get asked a lot about this question
[00:46:09] of when's the right project size cutoff point
[00:46:13] where I switch from string inverters to centrals.
[00:46:15] And I think it depends on a number of factors, right?
[00:46:18] It depends on your experience.
[00:46:19] Like a lot of European developers are more familiar
[00:46:22] with doing large projects with string inverters,
[00:46:25] 100 megawatt plus projects.
[00:46:26] They do them in Europe all the time with string inverters.
[00:46:29] They're very common to deploy.
[00:46:30] So if it's a European developer,
[00:46:34] they may be more prone to that
[00:46:35] because it's their experience having built them that way
[00:46:38] and they've had good experience with it.
[00:46:39] I think personally that it's a combination of economics
[00:46:43] and risk that you have to look at, right?
[00:46:46] The string inverters are more expensive
[00:46:49] to deploy than centrals.
[00:46:51] So a central inverter station
[00:46:53] with the inverter plus the transformer,
[00:46:55] stepping into 34.5 kV,
[00:46:57] which is kind of the typical collection voltage
[00:46:59] on a larger project.
[00:47:00] And then they go up to a grid tie substation
[00:47:02] that steps it up to transmission level,
[00:47:04] usually where they're interconnecting.
[00:47:06] But 34.5 is the collection voltage for the onsite.
[00:47:08] You're talking five cents per watt AC
[00:47:12] for central inverter stations.
[00:47:15] That's not a bad price.
[00:47:16] When you go to the virtual central from us,
[00:47:19] that's string inverter topology,
[00:47:21] you're probably looking at more like 11 to 12 cents.
[00:47:23] So it's more than double the price.
[00:47:25] Okay, well, but what about spare parts
[00:47:28] you have to keep onsite?
[00:47:30] Well, with a central inverter,
[00:47:32] you've got to train your O&M people.
[00:47:33] They typically have to go through a certification.
[00:47:35] With a lot of the OEMs,
[00:47:38] they won't let you do certain things.
[00:47:39] They'll only let their own personnel repair it.
[00:47:42] So if you have a failure of a unit,
[00:47:44] you might be waiting for a field service technician
[00:47:46] from the OEM to come.
[00:47:48] We have a different approach to that.
[00:47:49] We tend to train our customers O&M personnel
[00:47:52] on how to fix just about everything.
[00:47:54] But most of the OEMs out there don't do that.
[00:47:56] They force you to use their service personnel,
[00:47:59] their people.
[00:48:00] So that could be a factor in decision-making.
[00:48:03] The spare parts you have to keep onsite.
[00:48:05] If you have central inverter,
[00:48:06] you might be looking at $150,000, $200,000
[00:48:09] were the spare parts that you have to keep
[00:48:11] in a secure lockup onsite.
[00:48:12] So it's spare contactors, breakers, relays,
[00:48:16] IGBT stacks, IGBT devices, inductors, control board.
[00:48:22] There's fans, a myriad of parts you have to keep onsite
[00:48:26] with the central.
[00:48:26] With string inverters, it's some fans
[00:48:30] and surge protectors and maybe a spare unit or two.
[00:48:33] So you're probably looking at more like $15,000
[00:48:37] were the spare.
[00:48:37] So 1 10th the spares cost output
[00:48:40] that's sitting there onsite,
[00:48:42] collecting dust waiting for a problem.
[00:48:44] The other big one is when a failure occurs
[00:48:47] of a string inverter,
[00:48:48] even if it's a catastrophic failure, right?
[00:48:50] Where you've got to rip and replace the unit.
[00:48:52] You can be back up and running in three, four hours
[00:48:55] and you've only lost 125 or 150 kilowatts of output
[00:49:00] for that period.
[00:49:01] With a central inverter, you could be,
[00:49:03] if it's a relatively simple failure,
[00:49:05] you might be up the same day,
[00:49:07] but you could lose four to six hours
[00:49:08] while you're getting a authorization to proceed.
[00:49:11] If your own personnel can perform it great.
[00:49:13] If it means field service personnel from the OEM
[00:49:16] have to come out, you might be waiting a few days.
[00:49:19] If it requires parts that you don't have,
[00:49:21] you could be waiting a week or longer
[00:49:23] depending on if those parts are in country.
[00:49:25] So it's a question you have to ask
[00:49:26] is where are spare parts kept for those units
[00:49:28] if they're not parts that you're holding yourself?
[00:49:31] The other one is if a catastrophic failure occurs
[00:49:34] of a central inverter,
[00:49:35] I mean, you could be waiting tens of weeks
[00:49:37] for replacement inverter, right?
[00:49:40] Typically OEMs don't stock full spares.
[00:49:42] We do, we keep a couple of spare central inverters
[00:49:45] in Texas, but most OEMs don't keep spares in country.
[00:49:48] So they would have to come from overseas
[00:49:50] because the major inverter competitors
[00:49:52] are German, Spanish, Japanese, Chinese, right?
[00:49:56] That's where they're coming from.
[00:49:58] So this is a factor and if you're losing,
[00:50:01] if you have a catastrophic failure of a central inverter,
[00:50:03] you could be losing a four and a half megawatt block
[00:50:06] for weeks, right?
[00:50:07] So the energy harvest loss is substantial.
[00:50:10] What I tell people is look,
[00:50:11] my personal feeling is projects that are,
[00:50:15] maybe above 25 megawatts where you would be deploying
[00:50:18] five or six central inverters.
[00:50:20] That's when I switch over and do it with centrals.
[00:50:24] Projects smaller than that
[00:50:26] I would recommend doing with strings.
[00:50:28] The other exception though
[00:50:29] is when you have unusual geographic topology.
[00:50:33] So we have a project in upstate New York
[00:50:36] designed by one of our developer partners.
[00:50:39] It's 270 megawatts AC.
[00:50:42] It's in one megawatt, two megawatt
[00:50:44] and three megawatt AC blocks.
[00:50:46] So they're doing it with the virtual central
[00:50:48] inverter stations because the land was such
[00:50:51] that it had forested area they weren't touching.
[00:50:54] It had a swampy area they weren't touching.
[00:50:58] It's a conglomeration of multiple different farms
[00:51:01] that they merged together into one plot of land
[00:51:03] with multiple leases from the landowners.
[00:51:06] So it's a bit of a chopped up site.
[00:51:09] There's some undulation to the land as well
[00:51:11] which made it unusable.
[00:51:13] So that jobs like that where you can't use
[00:51:17] nice rectangles of DC make it less conducive
[00:51:21] to use centrals because a lot of the centrals
[00:51:23] are monolithic meaning that they're one size.
[00:51:26] Like our unit is four and a half megawatt
[00:51:28] or 4.3 megawatt, but it's one unit.
[00:51:31] If I had to use it on a where I only need three
[00:51:33] megawatt it means I'm just derating it.
[00:51:35] I'm not getting my value and it doesn't change
[00:51:36] the price of the unit.
[00:51:38] It's still the same price as the four and a half.
[00:51:41] So that's problematic.
[00:51:42] Now there are modular central inverter designs
[00:51:46] that are out there where you can go with blocks
[00:51:48] of one or 1.1 megawatt and you can have three blocks,
[00:51:51] four blocks, two blocks.
[00:51:53] Those are a little more scalable for those sites
[00:51:57] but there's some drawbacks to that
[00:51:58] that I won't get into that around efficiency
[00:52:01] and so on with units like that.
[00:52:04] So there's some challenges no matter what you do.
[00:52:06] I do have customers in the US who swear by doing projects
[00:52:10] as big as 75 megawatts with string inverters
[00:52:12] and then only above that do they migrate to central.
[00:52:15] So it's really about your experience.
[00:52:20] Customers who've had a bad experience
[00:52:21] with a central inverter sometimes tend to be more prone
[00:52:24] to go with string inverters.
[00:52:26] And I had a customer tell me,
[00:52:28] I thought this was a good one,
[00:52:30] or she said that the inverter that you like the best
[00:52:34] is the one you've never deployed before.
[00:52:36] And this is kind of true
[00:52:38] because everybody has problems, right?
[00:52:40] The thing is how do you deal with them?
[00:52:41] How do you solve those problems?
[00:52:43] How do you bring your team to bear to come together,
[00:52:47] work with the customer,
[00:52:48] get through whatever challenges there are.
[00:52:50] Every single solar project I've ever been involved in
[00:52:53] has had challenges on the execution side
[00:52:56] and it's just the way it is.
[00:52:57] I mean, you're building stuff outdoors.
[00:53:00] That's the way it goes, right?
[00:53:01] The weather doesn't cooperate,
[00:53:03] logistics challenges hit you,
[00:53:06] you get freight damage of components.
[00:53:08] How do you rise to the occasion,
[00:53:10] solve those problems as quickly as possible?
[00:53:12] And it's not always as quickly as everybody would like
[00:53:15] but nonetheless, you work through those things
[00:53:17] with your customer and you never abandon a project.
[00:53:20] Good nuance there.
[00:53:21] Well, let's close off on the final bonus
[00:53:23] and that is the financing piece.
[00:53:25] Will you tell us about that?
[00:53:26] Yeah, so Siemens Financial Services
[00:53:28] is an entity within the Siemens portfolio,
[00:53:32] the Siemens parent organization
[00:53:35] who take care of all manner of financing on projects.
[00:53:41] They will participate in some instances
[00:53:44] as secondary tax equity investors,
[00:53:47] or sorry, secondary equity investors.
[00:53:49] They don't participate as tax equity typically
[00:53:52] but they will act as a secondary equity investor
[00:53:55] on a project or project portfolio.
[00:53:58] They can provide long-term debt financing.
[00:54:01] So there's an equity group and a debt group.
[00:54:04] So they can be the long-term debt financier
[00:54:07] on a renewable project.
[00:54:10] They can provide also construction financing,
[00:54:13] so short-term debt financing to the developer
[00:54:16] before the project goes to COD
[00:54:18] and they can flip that into long-term debt as well.
[00:54:21] So they have those, the ability to do those.
[00:54:24] And then more recently,
[00:54:25] they've started to act as equity investors
[00:54:28] in actual companies.
[00:54:29] So they are investing in solar developers
[00:54:33] and other companies in the renewable energy space,
[00:54:36] whether they'd be equipment manufacturers.
[00:54:38] So they'll act as an equity investment
[00:54:40] and infusion of first or second round capital
[00:54:43] into an actual company to help it stand up.
[00:54:46] And then their expectation of course
[00:54:48] is some of the dividends that result
[00:54:50] as an outcome from the projects
[00:54:54] that are executed by that entity.
[00:54:56] So they have a multitude of different methodologies
[00:55:00] of investing in the renewable space.
[00:55:02] They've deployed several billion dollars of capital
[00:55:07] into renewable energy projects worldwide
[00:55:09] and I can connect customers who are interested
[00:55:13] in Siemens Financial Services
[00:55:16] participating in their projects,
[00:55:18] I can connect them on opportunities.
[00:55:21] The other thing I would say
[00:55:22] is we've done some unusual things in the past
[00:55:25] with customers, we've invested with customers
[00:55:28] to provide them letters of credit
[00:55:30] to support the deposits that they had to make
[00:55:33] for interconnection agreements and PPA agreements
[00:55:37] in exchange for some preferential treatment
[00:55:40] when the time comes for equipment selection, right?
[00:55:42] Not meaning that you have to use us,
[00:55:44] but that we kind of get a last look
[00:55:45] at an opportunity to match the pricing
[00:55:47] in the marketplace that you're able to secure, right?
[00:55:49] So it's another thing that Siemens can do
[00:55:53] is to help developers where cashflow may be challenging,
[00:55:59] to do some things there.
[00:56:00] And I guess the last thing I would say about Siemens
[00:56:02] is that we understand the challenges
[00:56:05] of the solar developers and solar EPCs
[00:56:09] and we have some flexibility
[00:56:12] in terms of how we structure the payment milestones
[00:56:17] and due dates for equipment on these projects
[00:56:20] because we understand how challenging it can be
[00:56:22] and how tight the cash flows can be on projects.
[00:56:25] And we're willing to work with customers
[00:56:27] to make sure that they can get their projects executed.
[00:56:32] If they work with us,
[00:56:33] we can be very, very flexible in that regard.
[00:56:36] Well, thank you, Rudy.
[00:56:37] And I think everything you've shared
[00:56:38] is gonna be super useful for folks.
[00:56:41] So 10 things to consider and think through
[00:56:44] before you're doing these projects plus two bonuses.
[00:56:46] So we really appreciate your time
[00:56:48] and thank you so much for being here.
[00:56:49] Well, thank you.
[00:56:50] I appreciate you guys.
[00:56:51] It's been a wonderful experience.