An experienced asset management team, whether housed internally or under an outsourced service, is critical to successful portfolio management. Implementing the structure to ensure asset-management challenges are addressed prior to experiencing profit degradation sits in the hands of the AM team.
At what stage do most solar projects run into problems, and how can a good asset management firm help navigate those difficulties?
This discussion addresses the challenges in the post-construction phase of the project (asset). Within this cycle, the focus is on the management versus technical aspects of the more than 25-year life of a typical solar project.
First let’s define operations and maintenance (O&M) vs. asset management (AM).
”In the PV industry, the term O&M describes a set of activities, most of them technical in nature, that enable power plants to perform their task of producing energy in compliance with applicable rules and regulations,” according to Cedric Brehaut of SoliChamba, author of the GTM Research report on O&M. “O&M is sometimes considered as a subset of asset management, which consists of the financial, commercial and administrative activities necessary to ensure that the plant’s energy production translates into the appropriate revenue stream.”
What are five major asset management challenges solar PV portfolio managers experience with growing and dispersed assets to ensure the return on investment is secure and properly channeled?
1. Multiple And Complex Reporting Requirements
- Deferred tax/IFRS/extensive support to audit process
- Different valuation rules/accounting standards
- Often requires complex consolidation
- Reporting to (international) investors
- Reporting to financing entities (including forward-looking financial statements)
- Local and statutory requirements
- The complexity of reporting requirements are caused by a many factors including:
- Cash Management
- Complex cash management results from account hierarchy and cash waterfalls.
2. Regulatory Changes
- Changing legal and tax environment require continuous monitoring and fine tuning.
- Local Diversity
- Every country/state is different, making it very challenging to coordinate with local service providers.
- Field vs. Administration
- The (local) administrator doesn’t always understand what happens in the field. Good coordination is crucial
The resolution of solar portfolio challenges lies in the combination of the service provider’s team experience and the robustness of its monitoring capabilities.
The Right Team
An experienced asset management team, whether housed internally or under an outsourced service, is critical to successful portfolio management. Implementing the structure to ensure asset-management challenges are addressed prior to experiencing profit degradation sits in the hands of the AM team.
Attributes of core AM team experience to confirm include:
- Communication
- Speed of communication
- Technical competency
- Creativity in solving problems
- Comprehensiveness of communication
- Clear hierarchy/points of contact
- Human resource qualities
- Motivation
- Honesty
- Attitude of communication
Fleet-Level Monitoring
As solar portfolios grow larger with more dispersed projects fleet-level monitoring is emerging to fulfill complex resource requirements.
(Author’s Note: Solar Power World addressed this in a 2014 webinar entitled “When Did Solar Monitoring Start to Matter?” which is still available at www.solarpowerworldonline.com)
Solar monitoring is evolving from specific subsystem monitoring (energy output from solar panels as an example) into Solar Enterprise Resource Planning (SERP) systems for fleet-level management. This approach mimics holistic systems seen in corporate settings to integrate technical data arising individually out of the systems into a broader picture of operations and all the data subsets involved with a given solar asset.
A SERP should readily provide insight into all operational (technical) and reporting (warranty, insurance, financial reporting including investor statements) aspects of the each individual asset. Specific assets should then be aggregated up into portfolio reporting — quite handy for such financial innovations as YieldCo’s.
SERP modules provide the best possible insights into the PV asset operations through:
- World-class monitoring systems
- Service management
- Asset management
- Integrated management of multiple and geographically distributed PV plants
- Extensive and customizable reporting capabilities
By Vassilis Papaeconomou, Managing Director, Alectris