A handful of large companies currently dominate the U.S. solar PV operations and maintenance market. But distinct player landscapes also exist at the regional level, according to the latest O&M report published by GTM Research, “Global Solar PV O&M 2017-2022: Markets, Services and Competitors.”
The report identifies the top PV O&M vendors in the nation: First Solar, SOLV, MaxGen, SolarCity, and SunPower. These five players alone represent more than 19 gigawatts of operational PV systems under O&M at the end of Q3 2017 -- more than the 30-plus other U.S. vendors analyzed in the report.
Excluding the residential segment, the top five firms manage O&M for a whopping 40 percent of U.S. installed capacity.
Nationwide numbers mask regional differences
For the first time, the new GTM report also broke down the analysis by region, using the eight U.S. regions defined by the Bureau of Economic Analysis (BEA).
A quick look at the top players by region shows that First Solar leads in the Far West region and SOLV in the Plains and Rocky Mountain regions, but all the other U.S. regional markets have leaders that are not in the national top five:
- Borrego Solar in New England
- QE Solar in the Mideast
- Bay4 Energy Services in the Great Lakes
- Strata Solar Services in the Southeast
All regions are not equal
Of course, the relative weight of each region matters a lot in the nationwide analysis. The Far West region, for example, accounts for 45 percent of the installed capacity projected at the end of 2017, while the Southeast, Southwest, and Mideast regions amount to 39 percent in aggregate. The remaining 16 percent are split between the Rocky Mountain, New England, Plains, and Great Lakes regions.
This variation in local market size explains why firms like Borrego Solar, QE Solar, Bay4 Energy Services and Strata Solar Services can be regional leaders without appearing in the U.S. top five. That's because nationwide rankings are heavily skewed towards regions where other players like First Solar and SOLV are stronger.
Notably, MaxGen Energy Services and SunPower do not lead in any single region but rank among the top vendors in multiple regions and show a more geographically diverse portfolio than most other players.
Segments also matter. The landscapes for commercial, industrial and utility-scale PV plant O&M have different characteristics and different market players, and the new GTM report analyzes vendor landscapes and rakings in each segment and region.
Does the future belong to local or national players?
This is the twenty-million-dollar question.
Scale matters in O&M, so portfolio size is an advantage. Geographic diversification is an obvious way for vendors to grow, but it requires cash and involves both organizational and cultural changes. The move is risky, and while it does increase scale, it may not yield significant efficiency gains because in the maintenance business, most of the economies of scale happen within a given service territory where technicians and equipment can be shared across a number of PV systems. This explains why the U.S. O&M landscape still features strong local firms with a focus on a single region or even a single state.
Operations management, the ‘O’ in O&M, is a different game. It is the area where nationwide players do have an advantage: a single operations center can supervise sites located across the country, analyze their performance, dispatch technicians, and report to asset managers and owners. Operations centers that manage more sites tend to be more efficient. Also, for large utility sites subject to North American Electric Reliability Corp rules (plants above 75 megawatts AC), only vendors with solid financials can invest in compliance and maintain a balance sheet that would survive the potential cost of non-compliance fines.
Follow the money
While some O&M vendors are content being local players, most of the top 15 O&M vendors in the U.S. have national ambitions and are investing in new service centers to expand to more states across the country. The underlying threat for local firms is that investors with geographically dispersed portfolios will favor national O&M providers that can deliver consistent quality of service and consistent data across a fleet of assets in different corners of the U.S. In this scenario, local O&M vendors could be relegated to a role of maintenance subcontractors working for nationwide players who control the customer relationship.
Desperately seeking margin
In a very price-competitive environment, the race to achieve nationwide service coverage could be an attempt by vendors to maintain direct customer relationships with large portfolio owners, in a bid to preserve both contract volumes and margin. But geographic expansion is capital-intensive and could result in red ink for a few years as O&M firms invest in new staff and infrastructure in the hope of winning new business.
***For more details about O&M markets, trends, and detailed competitive landscape analysis by country and segment (including 128 vendors), including region-level landscape by segment for the U.S., as well as market forecasts to 2022 and more than 70 detailed vendor profiles, refer to the latest GTM Research and SOLICHAMBA report: Global Solar PV O&M 2017-2022: Markets, Services and Competitors