The solar industry has become a mature industry with major global investors getting seriously involved and previously unseen amounts of money flowing into solar. With the professionalisation of solar investors and the globalisation of solar investment portfolios, service quality expectations are changing and rising rapidly, which puts increasing requirements on asset managers. As opposed to operation & maintenance (O&M) service providers, who take care of the solar power plant on a technical level, asset managers deal with the commercial and financial management of a solar investment. They manage a company – or a portfolio of Special Purpose Vehicles (SPVs) – rather than a power plant, often across different geographies, with different regulatory and environmental challenges and with a variety of different business models. Asset managers cover topics such as accounting and financial reporting, cash-flow management, debt management, insurance management, Power Purchase Agreement (PPA) management, SPV representation and O&M contractor supervision.
First, traditional asset management models employ a linear management approach, where information flows from the asset through the O&M contractor to the asset manager and ultimately to the asset owner. This linear approach means that the asset owner does not have direct access to data and information from the solar power plant. Rather, data and information from the asset are filtered before reaching the asset owner, creating mistrust and a lack of transparency between the main stakeholders. To address these inefficiencies, the asset management industry is transitioning to an asset-centric information-based management approach to address three key problems: (1) loss of generation and income; (2) loss of time; and (3) lack of transparency.
Second, asset managers are increasingly expected to continuously increase the return on investment by increasing revenues and reducing costs. This can be done via six key processes:
1. Plant performance
2. Operation cost reduction
3. Financial restructuring / re-engineering
4. Legal and contractual renegotiation
5. Technology adaptation and upgrades
6. People management
Third, asset managers are increasingly expected to adopt quality systems such as the ISO 55001 standard and rely on advanced digital tools integrated with other systems such as the monitoring platform, rather than spreadsheets in order to effectively and transparently manage assets. Adopting quality systems and digital tools will be key to staying competitive in solar asset management.
To address the issue of quality in solar asset management and support the growth of this segment, SolarPower Europe started a new endeavour – the development of the Solar Asset Management Best Practices Guidelines, to be launched in December 2019. The Guidelines will make the experience of leading asset management specialists available to the global solar industry, including investors looking for quality services, with the aim to increase quality and consistency in the market.
For further trends in solar, download the Global Market Outlook for Solar Power 2019-2023
Join us in London on the 5th of December for the annual O&M and Asset Management event which will drive the discussion on enhancing excellence and transparency, as well as new digital solutions that the industry, the financial community and all the relevant stakeholders can benefit from.
Acknowledgement for input: Ypatios Moysiadis, Greensolver