Photo courtesy of Assurant
As the solar market grows, additional services to navigate and protect solar projects are becoming increasingly important. Here are short summaries of how a few can help.
Asset Management
Traditionally, solar projects were promoted as low-risk investments with few moving parts, well warranted equipment and little technical maintenance. However, as the market has matured, maintenance requirements have been more challenging, says Chad Sachs CEO of RadianGen. There has been consolidation in the equipment sector and the investment structures used to finance projects are more complex. In addition, the ITC structure has created disincentives for installers and developers to focus on long-term performance.
“While solar is a good investment, these factors underscore the importance of good, qualified management across all of the functional disciplines that are required for the asset – technical, contractual and financial,” Sachs says.
Solar Asset Management (SolarAM) is the comprehensive scope of work necessary to ensure that a solar project performs contractually, technically and financially to provide the expected return on investment.
“It is more than ‘boots on the ground’ technical maintenance,” Sachs says. “SolarAM requires a deep understanding of how the equipment, contracts and financial structure all work together to achieve desired results.”
Consulting
“In a rapidly changing solar market, the only thing predictable is lack of stability,” says Ed Heacox of Envect. “No venture is risk-free but professional consulting, specifically venture consulting, can help your business gain traction and reduce the chance of stalling or failing all together.”
Traditional consulting, Heacox says, is often focused on a narrower scope of work and for a shorter period than with venture consulting.
“Traditional consultants will offer ideas without navigating execution,” he says. “Venture consultants ideally are positioned early in the process to contribute advice, evaluate various strategic paths and then remain in place to execute the strategy.”
A specialized venture consulting team may also be able to serve as market data researchers, legal advisers, regulatory and engineering specialists and tax and transaction experts. Such a team can do all this while partnering with the client for a sustained period and keeping in mind your goals for success.
Insurance
“The solar insurance landscape is changing almost as fast as the industry,” says Jeanne Schwartz, vice president of new venture commercialization at Assurant. “Whenever a development occurs that presents a new risk, an insurance company is bound to come up with a solution. The good news is the falling price of solar systems also reduces the cost of required property and liability insurance and frees up financial resources to protect against other project risks.”
Four potential solar insurance products that Schwartz sees on the horizon are:
- Yield guarantees. This coverage protects a tax equity investor’s financial return and is seen as a comprehensive guarantee that can drive more tax equity investment into the market.
- Tax equity recapture. This is coverage for investors who may be reluctant to take advantage of the high yield tax equity investment can generate. Insuring against this possibility can help would-be investors get comfortable with this admittedly complex investment opportunity.
- Workmanship coverage. For homeowners interested in purchasing solar this coverage adds an additional layer of protection to the equipment warranties and supplemental products that uphold warranties even if the manufacturer is unable to do so.
- Bundled Operations and Maintenance (O&M) plans and warranty products. The combination of these services enable better budgeting for planned and unplanned maintenance expenses and more efficient protection against problems that threaten energy output.