blog The Importance Of Accurate Solar Performance Predictions Share Wind and Solar Energy Developing a utility-scale solar project requires a large upfront investment, which makes accurately predicting how much power it will produce a critical component of the process. The financial risks of both over- or underperforming expectations are substantial. Underperform and you risk defaulting on your loan. Overperform and you may discover you have overbuilt your plant, investing significantly more money (on equipment, maintenance and other ongoing project costs) than was actually required to meet the obligations of your power purchase agreement. Weather, as the fuel of a project, is the greatest source of performance variability. Although it is impossible to predict with 100% accuracy what weather will be like at a site throughout a project’s entire lifetime, there’s a great deal solar developers can do in the pre-construction phase to reduce project uncertainty as much as possible. Solar resource and other weather components, such as precipitation, wind speed and temperature, directly impact power generation, and finding reliable weather information is essential for estimating system production and profits. Developers benefit from reducing energy estimate uncertainty because investors reward projects with low uncertainty with much more favorable financing terms. Although each project is impacted differently by uncertainty, research from pyranometer manufacturer Kipp & Zonen has determined that during project financing, for every 1% in resource uncertainty reduction, developers save $20,000 on average through improved financial terms. Unfortunately, it is not uncommon to see errors in solar resource estimates equating to 2% to 5% reductions in energy produced. All of these percentages may seem small, but the associated financial losses add up in the long term. Consider a 10 MW PV project. If you underperform by 5%, in essence, you paid for a 10 MW plant but, in reality, ended up with a 9.5 MW plant. This would result in millions in lost revenue over the asset lifetime. As solar capacity grows, more and more operational projects are coming online and performing outside the range of initial expectations. In response, the industry is beginning to wake up to the issue of resource assessment and call into question how initial solar energy estimates are calculated.