The solar asset management industry has entered a new age of maturity. New opportunities and challenges are knocking on our door. Utilities are looking to diversify their assets away from fossil fuels to cleaner and easily deployed renewable energy assets. Infrastructure funds are investing in solar and larger institutional investors want a slice of the market as it offers a predictable income for the long-term future.
With the massive reduction in solar project expenditure, we see new countries investing in solar and “old markets” re-emerging in Europe, such as Spain, Italy, and France. Asset owners are now faced with the new challenge of managing assets across different geographies, with different regulatory and environmental challenges, not to mention different business models (subsidised, power purchase agreements (PPAs), pure merchant, etc.).
This creates a perplexing scenario for service companies and, in particular, solar asset managers.
In order to assist service companies and asset managers’ in transitioning to this new solar reality, asset management services need to step up.
Basics to consider for solar asset management
Before we start elaborating on how asset management should improve, we should outline the basics.
The points below should be taken into consideration when we discuss managing an energy-generating asset.
- We are managing an investment: a company – not just a plant.
- Markets constantly evolve where new possibilities and threats emerge.
- Long asset life cycles (30+ years) demand a long-term planning approach.
- “One size does not fit all”. Every asset has unique attributes and requirements, which may require a different management approach.
- It is vital to make sure that business stakeholders and especially people working on the assets remain engaged and incentivised.
- Tested management practises should form the basis of the asset management framework which should be implemented across portfolios with the necessary adaptations.
Improving solar asset management
Taking the above points into consideration, we need to develop the right environment for asset management to evolve and improve.
How could we take the traditional technical and commercial asset management functions to the next level?
The first step is to recognise that the current linear management approach, flow of information and decision making is not efficient. This linear approach prevents the flow of data and information from the asset to the asset owner and also limits and filters the information that the asset managers receive, which may create mistrust and a lack of transparency between the parties.
Source: Energybit © 2019
We need to focus on an asset-centric information-based management approach, where data capture and analysis will drive overall performance optimisation. This will enable the three main stakeholders to view the same set of data and make decisions based on pragmatic and valid information.
Source: Energybit © 2019
This new approach will enable asset managers to address three key problems.
- Loss of generation and income
- Loss of time
- Lack of transparency
Through industry experience, we can identify six key processes that asset managers should effectively use to achieve continuous improvement and performance optimisation.
- Plant performance
- Operation cost reduction
- Financial restructuring / reengineering
- Legal and contractual renegotiation
- Technology adaptation and upgrades
- People management
These processes also form the asset optimisation cycle, which is the level that the asset manager should strive to operate at.
Quality systems and digital tools
An integral part of the asset management evolution is the adoption of quality systems and digital tools.
The first key element is the ISO 55001 standard on asset management. However, there are very few asset management service providers that have been certified with ISO 55001.
Quality systems will provide the backbone of any standardisation for our sector and will indicate the internal transformational changes that service providers will have to undertake to improve their own organisations and deliver constant quality of service.
The second key element towards evolution is the adaptation of digital tools and information management systems. Even today, despite the multiple well-designed digital tools and platforms that exist, most asset management functions are performed on spreadsheets and communicated by email.
As a result, the asset owners and the industry are missing out on the historic value of information that derives from the assets and have information gaps. This restrains their capability of strategic, long-term asset management planning.
For asset management companies these two elements are critical and will help them stay competitive and deliver value to their clients.
Final thought – The social environmental aspect
As an industry, we are at the forefront of the energy transition and electrification of our societies. More importantly, we are spearheading the fight against climate change. Solar cannot operate without the key service functions. Therefore, as solar is a key solution against climate change, our responsibility to evolve and adapt is even more critical. The ‘Solar Asset Management Best Practices Guidelines’ is another step towards this aim.
With many years of experience and expertise in solar asset management, we created a guide on top tips to driving down solar maintenance costs. You can download it here.
