7 Degradation Risks That Affect the Price of Solar Power Plants

Table of Contents

• The price of a solar power plant varies significantly depending on degradation risks

• Risk 1: Soiling, cracking, and output degradation of solar panels

• Risk 2: Failures and shutdown history of power conversion equipment

• Risk 3: Degradation of cables and connections and reduced safety

• Risk 4: Corrosion and settlement of mounting structures and foundations

• Risk 5: Malfunctions in monitoring devices and communication environment

• Risk 6: Degradation of fences, drainage systems, and surrounding facilities

• Risk 7: Progression of degradation due to vegetation, shading, and poor drainage

• Practical procedures for reflecting degradation risks in price assessments

• Summary: Record degradation locations on-site to assess the reasonableness of the price

Solar power plant prices vary greatly with degradation risk

When assessing the price of a solar power plant, many practitioners focus on installed capacity, power sale conditions, generation performance, and remaining operational life. These are important checkpoints, but the factor that often has the greatest impact on the actual price is degradation risk. Solar power plants operate outdoors for long periods, and components such as solar panels, power conversion equipment, cables, mounting structures, foundations, monitoring systems, fences, and drainage facilities gradually deteriorate. Even if a plant appears to be generating without problems at the time of purchase, advanced degradation can lead to much higher future repair costs and a greater risk of outages.

For practitioners searching "solar power plant price", what matters is not just whether the quoted price is low or high. It is important to check which degradation risks are factored into that price. Low-priced assets may include reduced generation performance, equipment aging, unaddressed repairs, insufficient maintenance, or deterioration of the local environment. Conversely, a property that appears expensive may be easier to consider over the long term if the equipment is in good condition, inspection and repair records are well organized, and future degradation risk is low.

The difficulty of degradation risks is that they may not immediately show up in power generation. Even if part of a panel is dirty or has minor damage, it may not significantly affect generation performance in the short term. Degradation of cable sheathing or loosening at connection points can also be hard to detect from the surface. Deterioration of mounting structures or foundations likewise cannot be judged from routine generation data alone. However, if these issues are left unaddressed, they can lead to outages, reduced power output, decreased safety, and greater damage in the event of a disaster.

To assess whether a price is reasonable, you need to break down degradation risks by equipment and check which risks are affecting current power generation, which are likely to become future costs, and which are related to the land or on-site environment. This article explains seven representative degradation risks that influence the price of solar power plants. It is organized as practical perspectives you can use for pre-purchase checks, price negotiations, internal approval processes, and reviewing operations and maintenance.

Risk 1: Soiling, Cracks, and Reduced Output of Solar Panels

The first thing to check regarding degradation risk at a solar power plant is the condition of the solar panels. Panels are the core equipment for power generation, and dirt, cracks, discoloration, surface wear, or shading can reduce the amount of electricity generated. Even if the installed capacity is large, if the panels are in poor condition you cannot conclude that they will deliver power commensurate with their cost.

The likelihood of panel surface soiling varies depending on the local environment. In locations prone to airborne dust, with many fallen leaves, where bird droppings are common, or with abundant surrounding vegetation, dirt tends to remain on the surface. If the soiling is temporary, cleaning may improve the situation, but if it is left for a long time it can not only reduce power generation but also raise concerns about the management system.

Panels with cracks, chips, or discoloration should be evaluated not only by visual inspection but also in relation to their power generation records. Even if only some panels are affected, depending on how they are connected and the scope of the impact, they can affect the overall power output. If you find cracks or discoloration on site, confirm which row and position they are in, whether there are any anomalies in the generation records, and whether they are recorded in the inspection report.

When reviewing power generation performance, check not only the annual total but also the monthly trends. If generation drops only in certain seasons, dirt, shading, or overgrowth of vegetation may be the cause. In particular, weeds tend to be a problem in summer, while fallen leaves and shading are more likely to have an impact in autumn and winter. Cross-referencing past cleaning and mowing histories with generation performance makes it easier to assess the effects of panel degradation or inadequate maintenance.

In lower-priced solar power plants, panel degradation and insufficient cleaning can sometimes be the reasons behind the low price. In higher-priced projects, the good condition of the panels, the stability of power generation performance, and the clarity of inspection records may be included as part of the value. When inspecting panels, it is important not to judge by appearance alone but to check generation data, the local environment, and the maintenance history.

Risk 2: Failures and Shutdown History of Power Conversion Equipment

A major degradation risk that affects the price of a solar power plant is failure of the power conversion equipment. This equipment converts the electricity generated by the solar panels into a form suitable for sale, and if it stops, all or part of the plant’s generation may no longer be sellable. For projects with a history of reduced output or outages, it is essential to check the condition of the power conversion equipment.

What should be checked are the number of years since installation, past outage history, repair history, replacement history, and the contents of inspection reports. The passage of time itself is not necessarily an immediate problem, but caution is required if outages are repeated, restoration takes a long time, the cause is unclear, or the same location experiences recurring faults. Such histories directly affect future electricity sales revenue and repair costs.

It is also important to reconcile power generation records with outage histories. If there are months in which monthly generation drops sharply, verify whether the power conversion equipment experienced any outages during those periods. Even short outages can affect generation output. If generation performance has declined yet there is no explanation in the outage records, one should suspect insufficient documentation or weak management.

On site, we also check the installation environment of the power conversion equipment. We look to see whether vegetation is overgrown nearby, whether ventilation is ensured, whether it is located where it is susceptible to rainwater or moisture, and whether workers can safely approach it. Not only the condition of the equipment itself, but a poor installation environment can lead to failures or delays in inspections.

In lower-priced projects, the timing of power conversion equipment replacements and equipment malfunctions may be factored in. In higher-priced projects, good equipment condition, few shutdown records, and clear records of repairs and replacements may be valued. By confirming the risk of equipment stoppages in addition to the apparent power generation record, you can more accurately assess the reasonableness of the price.

Risk 3: Degradation of Cables and Connections and Reduced Safety

A degradation risk that is often overlooked at solar power plants is the deterioration of cables and connection points. Compared with panels and power conversion equipment, these components are less conspicuous, but they are essential for safely conducting the electricity generated. Damage to cable sheaths, loosening of connection points, damage to protective conduits, animal-inflicted damage, and contact with vegetation can all lead to downtime or reduced safety.

Cables are equipment that are vulnerable to outdoor environmental conditions. Ultraviolet radiation, wind and rain, temperature changes, vegetation, animals, and contact during work can accelerate their deterioration. In particular, areas close to the ground, under mounting racks, places covered by vegetation, and around junction boxes make deterioration and damage hard to see. During on-site inspections, check whether cables are sagging, whether the sheathing is damaged, and whether protective components are broken.

The condition of the connection points is also important. Poor connections or deterioration can not only cause reduced power output or system shutdowns, but also pose safety risks. Check the internal condition of junction boxes and relay equipment, the effects of rainwater and moisture, damage to doors or external enclosures, and the overgrowth of surrounding vegetation. Even if there are no major outward signs, if an inspection report points out overheating or connection abnormalities, you need to verify the status of the response.

When there is an anomaly in power generation performance, we consider not only panels and power conversion equipment but also cables and connections as possible causes. If only some circuits have low output, generation drops during specific periods, or stoppages occur intermittently, connection or wiring issues may be involved. In cases where the cause of a sustained decline in generation remains unknown, the risk of hard-to-see wiring systems cannot be overlooked.

In price assessment, we check whether deterioration of cables and connection points will lead to future repairs. If a cause investigation or repairs become necessary after purchase, time and costs will be incurred. In lower-priced cases, such hard-to-see deterioration may lie behind the price. In higher-priced cases, well-organized wiring, clear inspection records, and easier confirmation of safety can be valued.

Risk 4: Corrosion and Settlement of Mounting Structures and Foundations

When determining the price of a solar power plant, the condition of the racking and foundations is extremely important. The racking and foundations are the structural components that support the panels, and their condition is difficult to judge from generation figures alone. However, corrosion, tilting, loosening of fastenings, and settlement or scouring around the foundations can greatly affect long-term operational safety and future repair costs.

Mounting structures are exposed to wind and rain, humidity, soil dust, vegetation, snowfall, and the surrounding environment. If corrosion has progressed or fastenings are loose, the risk increases during strong winds or heavy snowfall. Even if they appear problem-free from a distance, deterioration may be progressing at the base near the ground, at joints, around bolts, or in areas hidden by vegetation. During on-site inspections, it is necessary to check not only visible areas but also locations that are prone to deterioration.

Check around the foundation for settlement, tilting, cracking, scouring/erosion, and soil loss or deposition. On poorly drained land or slopes, rainwater flow can erode the ground around the foundation. If soil around the foundation is being washed away, the support frame is slightly tilted, or there are locations that serve as rainwater flow paths, they should be treated as future repair risks.

Degradation of racking and foundations may not immediately be reflected in revenue from electricity sales. For that reason, looking only at generation performance can make it seem as if there is no problem. However, concerns with structural components can lead to greater damage in disasters, increased burden for repair work, and reduced safety during operations. If major repairs are required after purchase, power generation may be suspended and additional costs may occur.

In inspection reports, we check whether corrosion of the support frames, loosening of fastening components, scouring around the foundations, slope failures, or signs of settlement are noted. If such issues are noted, we determine whether they have been remedied, are being monitored, or remain unaddressed. If the report is merely formal and the condition of the frames or foundations is not adequately recorded, on-site verification becomes more important.

In lower-priced projects, deterioration of the racking and foundations may be hiding future costs. In higher-priced projects, the structural components may be stable, and good condition—including drainage and ground management—may be reflected in the price. By looking not only at power generation but also at the supporting structural parts, you can make a more realistic assessment of the price’s reasonableness.

Risk 5: Problems with monitoring devices and the communication environment

As a degradation risk for solar power plants, malfunctions of monitoring equipment and communication environments are also important. Monitoring equipment is used to monitor power generation and equipment abnormalities, and if the communication environment is unstable, detection of anomalies is delayed. Because power plants are not places where people are always present, the condition of monitoring and communications is directly linked to the risk of downtime and the quality of operation and maintenance.

First, what you should check is whether power generation data are being continuously collected. If there are many data gaps, periods of communication failure, no history of abnormality notifications, or the cause of reduced generation cannot be identified, you may not be accurately understanding the operational status. Even if monitoring equipment is installed, it is not a source of reassurance if it does not provide data usable in practical operations.

We also review the history of past incident responses. When power generation fell or equipment stopped, we check whether the monitoring devices were able to detect the anomaly, who received the notification, and how long it took for an on-site inspection to be carried out. Even if the monitoring devices are operating normally, if the incident response framework is unclear, downtime may be prolonged.

Communication conditions depend on local circumstances. In mountainous or remote areas, communications may become unstable. Check the installation location, power supply, protective condition, and surrounding environment of the communication equipment to see whether it can be used continuously. At power plants with frequent communication problems, confirmation of generation performance and responses to abnormalities tend to be delayed.

Failures in monitoring devices and communication environments are aspects that are not easily reflected directly in price. However, if detection of abnormalities is delayed and the power generation downtime is prolonged, it will affect electricity sales revenue. In addition, for projects with insufficient generation data, the basis for judging the appropriateness of the price becomes weaker. When data is lacking, it becomes more difficult to trace the causes of equipment deterioration and declines in power generation.

In lower-priced projects, the reason for the low cost may be that monitoring equipment is outdated, communications are unstable, or power generation data is insufficient. In higher-priced projects, value may be placed on having an established monitoring system, continuous acquisition of power generation data, and clear records of responses to abnormalities. Confirm monitoring and communications as important equipment for visualizing the condition of the power plant.

Risk 6: Deterioration of Fences, Drainage Facilities, and Surrounding Equipment

Peripheral facilities such as fences, gates, drainage systems, and maintenance access paths should not be overlooked as degradation risks that influence the price of a solar power plant. Although these are not power-generating equipment, they are involved in safety management, drainage, on-site work, and disaster response, and thus carry significant importance for long-term operation.

Fences and gates are equipment for preventing intrusion by third parties and animals and for maintaining the safety of the power plant. If there is damage, deformation, corrosion, faulty locks, or problems with opening and closing, the risk of intrusion and management concerns increase. Animal intrusion can lead to cable damage and deterioration of the area around equipment. When vegetation is overgrown around fences, damaged areas are more likely to be overlooked.

Drainage systems affect the condition of foundations, cables, and maintenance access walkways. When drainage channels are clogged, sediment has accumulated, leaves tend to collect, or water pools around equipment, problems are more likely to occur during heavy rain. Poor drainage can lead to scouring around foundations, weakening of the ground, and adverse effects on electrical equipment.

Access paths are also ancillary facilities that should be checked. You should check whether they can be walked on safely for inspections, mowing, and repairs; whether service vehicles and equipment can get through; and whether mud or puddles form after rain. At power plants where access paths are difficult to use, the quality of inspections can decline and the detection of abnormalities may be delayed. Power plants that place a heavy burden on on-site work tend to have higher maintenance costs.

Deterioration of surrounding facilities is difficult to detect from power generation records alone. Even if it does not have a significant impact on current power output, it can affect future maintenance burdens and disaster recovery. In lower-priced projects, inadequate repairs to fences and drainage facilities may be the underlying cause. In higher-priced projects, the surrounding facilities may be well maintained and ease of management may be valued.

When assessing the price of a solar power plant, you need to check not only the power-generating equipment but also the equipment for safely maintaining the plant. By inspecting the condition of the fences, drainage systems, and access roads, you can more easily assess the quality of past maintenance and the outlook for future maintenance costs.

Risk 7: Progression of deterioration caused by vegetation, shading, and poor drainage

Finally, the degradation risks to confirm are the progression of deterioration caused by vegetation, shading, and inadequate drainage. These are not deterioration of the equipment itself, but site environmental factors that accelerate equipment deterioration. Because solar power plants are outdoor installations, they are continuously affected by the surrounding environment. If you assess the price without inspecting the site environment, you may overlook future decreases in power generation and repair costs.

Vegetation overgrowth affects both power generation and equipment management. If weeds cast shadows on panels, power output may decrease. When vegetation grows around cables and connection equipment, inspections become more difficult and deterioration or damage can be easily overlooked. If vegetation around fences is left unchecked, it also becomes difficult to identify damaged areas.

Shadows from nearby trees are also important. Trees that posed no problem when operation began can grow over the years and expand the shaded area. In winter, when the sun's altitude is lower, even distant trees can cast shadows. If power output drops only during certain seasons, you should suspect the impact of shading.

Poor drainage is a major factor that accelerates equipment deterioration. In areas where water tends to accumulate, the ground around foundations can become weakened, and cables and electrical equipment may be adversely affected. At power plants where drainage channels are prone to clogging, inspections and cleaning are necessary after heavy rain. If sediment flows in or accumulates, it can also affect mounting structures, foundations, and access and maintenance walkways.

These on-site environmental risks may not be fully apparent from inspection reports alone. You need to walk the site and check the condition of vegetation, causes of shading, blockages in drainage channels, traces of water flow, sediment accumulation, and slope conditions. By cross-referencing power generation records with on-site environmental conditions, you can determine whether degradation risks are affecting current power output or remain as future risks.

In lower-priced projects, the low cost may reflect the burden of vegetation management or drainage management. In higher-priced projects, a well-prepared site environment and management that make deterioration less likely may be valued. It is important to be aware that equipment deterioration progresses not only because of the equipment itself but also because of the local environment, and to check for this.

Practical procedures for reflecting deterioration risk in pricing decisions

To reflect degradation risk in price judgments, first separate and organize power generation performance and equipment condition. Check whether the generation output is stable and whether there is a downward trend month by month or year by year, then inspect the condition of the panels, power conversion equipment, cables, mounting structures, foundations, monitoring systems, fences, and drainage facilities. It is important not to conclude there are no issues based solely on generation performance; confirm whether there is any degradation that could lead to future costs.

Next, review the inspection report and the repair history. Check whether the noted issues are specific, whether the locations in the photos can be identified, and whether records of remedial work are retained. If the report is perfunctory and it’s unclear where the problems are on site, additional verification is necessary. If the repair history is clear, it becomes easier to anticipate future liabilities. Any unresolved issues should be reflected in price negotiations and in the post-purchase management plan.

During on-site surveys, we verify and record the locations of deterioration for each piece of equipment. We check panel soiling and cracks, the installation environment of power conversion equipment, cable damage, corrosion of mounting structures and foundations, clogged drainage channels, damaged fences, and the extent of vegetation growth. It is also important to confirm whether the drawings match the site. If drawings have not been updated and remain outdated, the locations of deterioration and the items to be managed cannot be accurately identified.

Deterioration risks are divided into those that can be remedied and those that are difficult to remedy. Some risks can be improved by cleaning, mowing, minor repairs, or replacing protective components. On the other hand, drainage problems caused by terrain, persistent shading from surrounding trees, major deterioration of foundations or mounting structures, and locations that are difficult to repair due to poor road access may not be easily resolved. It is important to determine which of these is the reason for a low price.

Finally, reflect deterioration risk in post-purchase maintenance costs and future repairs. Even if the price is low, if repairs are concentrated after acquisition the actual burden can become significant. Conversely, even if the price is high, if the equipment is in good condition and future risks are small, it may be easier to consider for long-term operation. Deterioration risk is not merely a flaw but an important basis for explaining the reasonableness of the price.

Summary: Record areas of deterioration on-site and evaluate the reasonableness of the price

Degradation risks that affect the price of a solar power plant include soiling and cracking of solar panels, failures of power conversion equipment, deterioration of cables and connections, corrosion of mounting structures and foundations, malfunctions of monitoring devices and communication systems, degradation of fences and drainage facilities, and progression of deterioration due to vegetation, shading, or poor drainage. By checking these, it becomes easier to understand future liabilities that are not apparent from the surface price.

There may be reasons why a low-priced power plant is cheap. Unaddressed repairs, equipment deterioration, inadequate management, or deterioration of the local environment may be behind it. If the reason for the low price is clear and represents a risk that can be remedied, it may be worth considering; however, it is dangerous to make a decision while the cause is unknown. Even for a higher-priced power plant, if the equipment is in good condition, inspection and repair histories are well organized, and the risk of deterioration is low, it can be considered a project that is easier to operate stably over the long term.

For practitioners, it is important to organize degradation risks based on evidence rather than intuition. Connect and review power generation records, inspection reports, repair histories, site photographs, and drawings so you can explain where on which equipment degradation exists and how it affects power generation and maintenance costs. This is especially important for used solar power plants, where comparing past operating records with the current on-site condition is indispensable.

In on-site inspections, recording degraded areas not only with photographs but also with location information is effective. If you can organize panel soiling and cracks, cable damage, deterioration of mounting structures and foundations, clogged drainage channels, damaged fences, the extent of vegetation overgrowth, and trees that cause shading with location data, they become easier to use for repair estimates, price negotiations, internal briefings, and post-purchase management.

If you want to accurately assess degradation risks at a solar power plant, using LRTK (an iPhone-mounted GNSS high-precision positioning device) is also effective. If you can record degraded locations and inspection points within the plant together with high-precision location information, it becomes easier to share with stakeholders the discrepancies between drawings and the site, equipment degradation points, drainage and shading risks, and potential repair locations. When determining the price of a solar power plant, it is important to build up evidence of degradation risks that can be confirmed on site, not just rely on desk-based conditions.