Financial Risks of Patented Parts in Tracker Projects vs. MECASOLAR’s COTS-Based Model
Almost all leading tracker companies use patented parts, giving them control over the manufacturing and supply of critical components. This exposes operators and investors to significant financial risks.
One key risk is the absence of competition in the post-warranty period for replacement parts. Customers are often left at the mercy of tracker suppliers, leading to unpredictable costs that can undermine financial models. Moreover, reliance on a single supplier makes projects vulnerable to supply chain failures. If the supplier faces production constraints or stops manufacturing a necessary part, it can result in the affected components being forced to operate as fixed structures, reducing energy yield, or necessitating costly retrofits.
Another issue with patented parts is the need for specialised equipment during installation, which often must be sourced directly from the tracker supplier. We have observed that this specialised equipment can add approximately 150k USD in costs for a 50 MWp project. These expenses are typically non-recoverable, potentially luring customers into a ‘sunk cost fallacy’—tempting them to stick with the supplier to justify previous expenditures. Additionally, the use of specialised installation equipment often requires increased man hours for both training and the actual installation process. In a post-pandemic world, where labour costs have risen, these added expenses can become particularly burdensome, further escalating the overall costs of the project.
MECASOLAR’s Approach: Commercial Parts and Standard Tools for Predictable Lifecycle Costs
In contrast, MECASOLAR has opted for a more flexible and cost-effective approach by utilising COTS (Commercial Off-The-Shelf) components. This strategy provides several clear advantages: it reduces financial risk and ensures that the costs associated with the project’s lifecycle are more predictable. Additionally, MECASOLAR’s approach leverages standard, commercially available tools and equipment for installation, which significantly reduces initial capital expenditures and eliminates the need for costly, specialised tools. This also minimizes labour costs related to specialised training, making the installation process more efficient and cost-effective, especially in the current economic climate.
This approach is used in some other technological sectors and mirrors the philosophy behind open-source software, which prioritises accessibility, transparency, and flexibility. Both approaches minimise dependence on a single source, promoting long-term predictability and cost control.
Industries like rocket manufacturing, with companies such as SpaceX and Rocket Lab, have adopted similar practices, incorporating commercially available components to improve reliability and manage costs.
Key Strengths of MECASOLAR’s COTS-Based Approach:
- Availability of Spare Parts: Operators can source spare parts from multiple suppliers after the warranty period by utilising standardised components, which reduces the risk of price inflation and supply shortages. This leads to more competitive pricing and shorter lead times.
- Proven Reliability: The use of COTS components, which are mass-produced and tested across industries, ensures reliable performance, and reduces the chances of system failures.
- Cost Predictiveness: Commercial parts have more transparent repair and maintenance costs, enabling more accurate financial projections throughout the system’s lifecycle, making solar projects more attractive to investors.
- Market-Driven Pricing: Since the parts are not controlled by a single manufacturer, prices are driven by market forces, preventing operators from being subjected to monopolistic pricing.
- Diversification of Risks: By sourcing commercial parts from a wider supply chain, MECASOLAR reduces the risk of supplier failure, enhancing system reliability and lowering the overall cost of ownership.
- Standard Tools and Equipment Lowering Labour Costs: Unlike patented parts, MECASOLAR’s use of commercial components allows installation with standard tools and equipment, reducing initial costs and avoiding the need for specialised training. This not only lowers upfront expenses but also minimises labour costs, as fewer man hours are needed for both training and installation. This increased efficiency becomes especially significant in the context of rising post-pandemic labour costs.
- Longer System Lifespan: Commercially available parts are often backward-compatible, meaning newer, more efficient components can be integrated into existing systems without being tied to proprietary designs, optimising system performance over time.
Conclusion: Commercial Parts and Standard Tools Minimise Economic Risk
In the solar energy sector, predictability and cost-efficiency are vital. Proprietary parts introduce uncertainties that can disrupt financial models. MECASOLAR’s philosophy of using commercial parts and standard tools mitigates these risks by ensuring that all aspects of the system’s lifecycle are governed by open market prices and readily available equipment. This approach offers greater accuracy in modelling long-term costs, ultimately leading to more profitable projects.