“These systems are power plants – not simple appliances. They have complex contracts and highly engineered capital structures. This is where solar asset management plays a critical role. Smart, thoughtful and careful solar asset management is crucial to our industry’s continued success. Managing solar assets to maximize ROI for the long term —financially, operationally and technologically— is becoming increasingly crucial as our industry matures. The projects are getting built. Now we just need to make sure that someone is taking care of them properly.”
Over the last decade, we’ve witnessed a tremendous growth in solar photovoltaic installations sited across the United States. Currently there are nearly 20GWs of solar deployed in the U.S., nearly tripling cumulative deployment of 7.7GW in 2012. It is incredibly heartening to see the world’s cleanest energy resource secure a significant foothold in our nation’s energy portfolio.
As solar becomes a mainstream energy resource and an established investment asset class, it’s time to turn our focus to ensuring the long term success of our industry. At present there are hundreds of thousands of solar power systems deployed in the U.S. As with any significant capital investment, solar power system owners and operators have an obligation to manage significant capital assets efficiently, responsibly and profitably.
Performs Well; Reliable; Long-Lasting; and Cost Effective
We all aspire to ensure these qualities when building solar power system – whether it’s a 5kW system on a residential rooftop – or a 50MW ground-mounted utility-scale solar array. These systems are purposely exposed to the sun and the elements; the wear and tear takes its toll over time. How does one ensure – even exceed– expectations as a steward of these assets? These systems are power plants – not simple appliances. They have complex contracts and highly engineered capital structures. This is where solar asset management plays a critical role.
Complexity of Comprehensive Solar Asset Management – Involving a Myriad of Diverse Skill Sets
Comprehensive solar asset management involves precise contractual, financial and technical acumen in order to fulfill the demanding obligations solar power entails. When deploying solar, it’s expected that projects meet their performance expectations. A great deal of technical and financial expertise went into the system’s manufacture, engineering, design, development and execution. Carefully fulfilling ongoing requirements enables projects to live up to expectations.
Technical, contractual and financial asset management are all inextricably intertwined. System owners can’t just focus on one aspect at the expense of the other two. Technical optimization doesn’t mean much unless it is tied to the boundaries set by contracts and incentives – and achieves the financial goals of investors and owners.
Solar system owners are encouraged to leverage all tax and other incentives offered. These incentives introduce a host of complicated financial and contractual structures; they entail complex ongoing obligations that need to be managed carefully. A solar plant may be performing beautifully, but if the project’s contracts are not fulfilled – or the owners forget to fulfill ongoing obligations around incentives, critical benefits can be stripped away from a project. For example, many PV system owners have accepted cash grants; it’s crucial that each year that owners report how their plant is performing to the Treasury which provided the incentive.
Another example is when equipment breaks and owners need to replace compromised modules and other hardware. Technical solutions can vary and investors or lenders may have different risk appetites that complicate how quickly a decision can be made to fix a technical solution. Delays created from poor information dissemination —or poor maintenance of operational logs— can create unnecessary tensions with lenders and threaten overall performance of the project.
How does one pre-emptively manage these challenges? By having oversight and management of O&M providers; by ensuring that cost/benefit analysis of predictive maintenance solutions are done before something fails; by managing financial cash flows, invoices and payments so that there are no surprises. Your best resource is independent asset management.
The Benefits of Outsourcing Solar Asset Management
Solar projects are robust systems, but they need thoughtful financial, technical and operational management to achieve and exceed expectations. There are a myriad of ongoing obligations to fulfill. Owners often collapse by focusing on the day-to-day activities of taking care of the assets – rather than identifying, developing, and closing new projects and new revenue streams. Outsourcing these demanding obligations can make solar project ownership more efficient and cost effective.
Furthermore, many companies who believe that they can hire asset management expertise in-house have difficulty in finding an asset manager who’s mastered all the disciplines necessary: a team member that’s an accomplished accountant, engineer and attorney -- all rolled into one. By outsourcing to independent experts, solar power systems owners can ensure that they’re leveraging multidisciplinary expertise and best practices in solar asset management — from across the solar industry.
When owners attempt to handle these crucial –yet disparate– asset management skill sets in-house, they don’t benefit from the economies of scale and industry proficiency possessed by asset management experts who are managing many hundreds of MWs of projects across the PV deployment spectrum. By outsourcing to independent experts, systems owners can ensure that they’re leveraging knowledge of best practices in solar asset management — from across the solar industry.
Hiring independent solar asset management experts enables projects to perform at their full potential — yielding optimal results and delivering maximum return on investment.
Smart, thoughtful and careful solar asset management is crucial to our industry’s continued success. Managing solar assets to maximize ROI for the long term —financially, operationally and technologically— is becoming increasingly crucial as our industry matures. The projects are getting built. Now we just need to make sure that someone is taking care of them properly.
The Benefits of Outsourcing Solar Asset Management
Solar projects are robust systems, but they need thoughtful financial, technical and operational management to achieve and exceed expectations. There are a myriad of ongoing obligations to fulfill. Owners often collapse by focusing on the day-to-day activities of taking care of the assets – rather than identifying, developing, and closing new projects and new revenue streams. Outsourcing these demanding obligations can make solar project ownership more efficient and cost effective.
Furthermore, many companies who believe that they can hire asset management expertise in-house have difficulty in finding an asset manager who’s mastered all the disciplines necessary: a team member that’s an accomplished accountant, engineer and attorney -- all rolled into one. By outsourcing to independent experts, solar power systems owners can ensure that they’re leveraging multidisciplinary expertise and best practices in solar asset management — from across the solar industry.
When owners attempt to handle these crucial –yet disparate– asset management skill sets in-house, they don’t benefit from the economies of scale and industry proficiency possessed by asset management experts who are managing many hundreds of MWs of projects across the PV deployment spectrum. By outsourcing to independent experts, systems owners can ensure that they’re leveraging knowledge of best practices in solar asset management — from across the solar industry.
Hiring independent solar asset management experts enables projects to perform at their full potential — yielding optimal results and delivering maximum return on investment.
Smart, thoughtful and careful solar asset management is crucial to our industry’s continued success. Managing solar assets to maximize ROI for the long term —financially, operationally and technologically— is becoming increasingly crucial as our industry matures. The projects are getting built. Now we just need to make sure that someone is taking care of them properly.
Chad Sachs is CEO of RadianGEN, a provider of ongoing solar asset management and advisory services, works with solar power system owners to monitor and maintain solar system performance; and making sure that IPPs, utilities and system owners realize maximize return on investment.
