The growing significance of proper management of PV assets was once again underlined at our conference ‘Solar O&M Europe’ last October. As the industry in Europe continues to mature, portfolios consolidate, and (retroactive) changes in incentive programs result in increasing pressure on performance of assets, meaning that O&M and Asset Management becomes only more crucial.
We have gathered insights into the O&M (related) services landscape in Europe, which resulted in some interesting findings we want to share with you.
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Germany, Italy and Spain Most Active
At first glance, we can see that the countries that stand out as more active in the O&M field are Germany, Italy and Spain. More specifically, the total overview of 45 service providers consists of 12 German, 11 Italian and 7 Spanish companies, with the rest of the European countries being equally represented. As far as capacity under O&M is concerned, German providers account for the services of 48% of 10,9GW [M.E.G.1] [SS2] of the total capacity represented in this overview. Spanish service providers account for 17%, and Italian providers for 12%.
Portfolio Trends: Own Assets, Third Party Assets or Both?
These two graphs show two Top 10s: the first shows an overview of O&M providers doing O&M on assets owned by them or their mother company, while the other demonstrates an overview of O&M providers serving only third party assets. A clear observation is that in both cases German-based companies constitute the majority of assets under O&M.
The range of the portfolios in the first overview is larger than the range in the second (41-800 MWp vs 251-794MWp).
That observation led us to examine (out of the whole sample) exactly how many companies offer services to both their assets and third parties’ assets [SS5] or solely to the latter. The majority of the companies that provided data, specifically 77%, are providing services only to 3rd party assets, while the leftover 23% are providing services only on their own assets or to both.
Taking this analysis one step further, we break down the sample into two almost equal smaller samples, depending on whether or not the firm’s O&M portfolio is larger than 150MW. The results are similar to the one of the overall analysis, but it is worth mentioning that in smaller O&M providers, it is the vast majority of 86% of the firms which offer services to 3rd parties, while only a 14% of them take care of their own plants. From these numbers, we can infer that a smaller O&M portfolio implies also a smaller likelihood for the provider to also be the owner.
If we distinguish between ‘small providers (serving portfolios up to 150 MWp) and ‘ large providers (serving portfolios larger than 150 MWp), there is one interesting difference. Small providers are significantly less often the owners of the assets they serve when compared with large providers.
Fragmentation: Large differences between
UK and Italy
In order to assess how ‘fragmented’ the O&M market is in the main European countries, we calculate the ratio of the total industrial and large scale PV capacity of each country, which has its O&M services covered by its top 10 largest providers. The higher the ratio, the less players are actually involved in the market, thus resulting in lower fragmentation.[SS8]
The results are consistent with the general known profile of the markets. UK has the lowest fragmentation in the industry, since the nine biggest service providers of the country account for offering O&M services to 57% of the country’s non-residential and non–commercial capacity. France also has a comparatively low fragmented market; the ten largest providers of services account for 27% of the larger scale capacity. Germany appears more fragmented with 23% covered by the key players, but the highest fragmentation is observed in Spain and Italy, where the countries’ major providers serve respectively 20% and 18% of the total non-residential or-commercial capacity. This is in line with our overview of PV portfolios, which indicates smaller portfolios and a higher number of different owners (link to PV portfolios article).
Portfolio size market averages
The portfolios in the countries with the highest market fragmentation also have the lowest average plant capacity. These markets have relatively many service providers serving a high number of small plants. On the other hand, the more consolidated a market is, the larger the average plant capacity can be, such as in Germany and in the UK. In these countries there are less players serving on average larger assets. Through the overall portfolio averages, we can be informed about the overall power of the markets. Average portfolio sizes (in this overview) in Germany, Italy and UK are respectively 385MWp, 208MWp and 171MWp. In France and Spain, the average portfolio served is significantly lower at respectively 77MWp and 71MWp.
Large O&M providers serve larger portfolios but also larger assets
When comparing the different sizes of O&M providers in Europe, there are some interesting findings. The ten largest providers serve on average 611MWp with average plant capacity of 3,24MWp. Looking at only the top 10 would give an impression of a really consolidated market with large portfolios. As we move lower on the overview, the average plant number and average capacity is reduced, giving us a more objective view. The twenty largest providers, serve an average capacity of 422MW with average plant size of 2,6MWp, and for the complete Top 40 these averages are 251MWp and 2,4MWp. It can be concluded that at this point, the rule of thumb is: smaller service providers serve smaller portfolios consisting of smaller plants.