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Technical Debt is the hidden cost that a system owner incurs as a result of decisions made during the engineering, procurement, or installation of a solar project—often to save time or reduce initial expenses. It represents the gap between what you paid for and what you actually received in terms of system performance, reliability, and value.
In simple terms, Technical Debt is the difference between the expected value of your solar asset and the actual value you end up with. This discrepancy can come from poor design choices, substandard equipment, or shortcuts taken during installation.
**Technical Debt = Expected Asset Value – Actual System Value**
Imagine purchasing a photovoltaic (PV) system expecting it to be built to industry best practices, only to discover hidden flaws in its design or installation. These flaws represent Technical Debt, which must be addressed at some point—either by you or by the seller.
The consequences of Technical Debt are financial. It can lead to reduced energy output, higher maintenance costs, and lower overall returns. The longer you ignore it, the more expensive it becomes, much like interest on a loan.
**Analogy to Financial Statements**
Think of Technical Debt as a liability on your balance sheet. Just like financial debt, it carries an "interest" expense—this takes the form of:
- Reduced revenue due to lower energy production.
- Higher operating expenses from dealing with system inefficiencies or failures.
These ongoing costs continue until the issues are resolved.
**How Does Technical Debt Happen?**
Technical Debt often arises from:
- Poor equipment selection, leading to faster degradation and failure.
- Inadequate design or engineering that meets minimum code requirements but not performance standards.
- Installation mistakes or cutting corners that cause long-term problems.
- Safety risks and potential legal liabilities.
- Lack of proper documentation, making maintenance and troubleshooting harder.
- Unrealistic revenue projections based on flawed performance models.
**What Does It Mean for You?**
Technical Debt transfers costs from the contractor’s budget to your operational expenses. It reduces profit through lower generation income or higher maintenance costs—essentially acting as a recurring “interest†charge.
**How Can You Prevent It?**
To avoid Technical Debt, consider the following:
- Implement a strong Quality Assurance (QA) plan, including third-party inspections and commissioning.
- Use a robust procurement process with input from experienced engineers.
- Hire skilled installers and reputable engineering firms.
- Consider third-party reviews of engineering work if you’re not choosing your own team.
- Establish a preventive maintenance program to avoid gradual system degradation.
**Conclusion**
If you want to protect your investment and ensure long-term profitability, it's essential to address Technical Debt early. Contact Pure Power to learn how our Owner’s Engineering services help identify and eliminate Technical Debt before it impacts your financial model. Taking proactive steps today can save you significant costs down the road.