On panel at this year’s Intersolar North America, Haresh Patel talks with solar asset managers and software providers about the needs of asset managers and how they can apply data to drive insights and cost savings.
Asset management was a significant focus at this year’s Intersolar North America conference, with its own devoted sub conference hosted by SunSpec Alliance over the course of two days. This is being seen more commonly now, as asset management continues to gain new meaning and importance within the renewable sector. While asset management has historically been closely associated with the operations and maintenance sector, the importance of asset management from both a technical and financial standpoint is being recognised at more industry events, such as Solar Asset Management and Intersolar. At this year’s Intersolar North America, Mercatus CEO, Haresh Patel, was invited to lead a discussion with solar asset managers in the residential and C&I spaces and software vendors to address misconceptions within the business, the needs versus wants of asset managers, and how data and analytics can be applied to drive key learnings and cost savings. Here are the main takeaways from the discussion.
Contrasting What Asset Managers Say They Want Versus What They Need
A number of asset management software solutions have been built to address the various needs of asset managers, from a technical, financial/ commercial, contractual point of view. For asset managers who are managing a high volume of newly built of acquired assets, automating processes and tasks is proving to save both time and money. Software vendors today are focusing on delivering the right solutions that asset managers need to ensure optimal management and returns. As Edmee Kelsey, CEO of 3Megawatt, demonstrated by reading a laundry list of feature requests, asset managers still do not understand which types of features and capabilities that they need and why versus what they think they need. However, as Kelsey pointed out, the relative immaturity of the industry and the rate at which it is changing makes it difficult for asset managers to be sure. Kent Williams, VP of Asset Management at First Solar, affirmed this, saying that although the industry has progressed over the past ten years, “we’re hardly coming up the [industry] life cycle curve” and that in the slowdown after a period of massive growth, we’re still trying to understand what the solar businesses of today needs.
Translating Data Into Insights and Actions
In order to do so, Anand Narayan of Vivint Solar pointed out the importance of observing historical trends, which is becoming more prevalent on the utility side. Software tools are essential for capturing these trends that come from historical data, which are then analysed to reach insights and answers. However, information overload is counterproductive for companies, who are bombarded today with concepts such as big data and machine learning. At Mercatus, we’re seeing that this data is often inaccurate, siloed in different systems, and unfit for decision making. The net result is that “as an industry, we’re struggling to connect data to wisdom,” said Williams, which software is now enabling.
Companies now need to get strategic about their data so that they can make decisions quickly to improve the profitability of projects, satisfy investors and key stakeholders, and ultimately do what’s best for their business. For the asset manager, being able to show cost analysis is becoming essential in doing their jobs correctly, which means ensuring that assets are contractually compliant, financially profitable and technically sound.
Turning Asset Management from a Cost Centre to a Profit Generator
With the distinction of asset management comes the focus on the role of the asset manager. “Nobody rewards you for being compliant,” said Kelsey, pointing to the fact that asset management is only recognised when the asset is underperforming and losing money. Narayan attributed this to lack of visibility into the process, which is why asset management is seen as a cost-intensive business unit as it pertains to correcting maintenance issues. This then poses the question of ‘how can asset management start improving returns,’ which Sachs then attributed to risk allocation. The ability to make better decisions around resource allocation, show the cost analysis of site maintenance, and identifying the risks versus returns are now made possible by asset management software solutions. being able to squeeze revenue and cost saving from different aspects of the business are essential for maturing.
Keeping Investors Satisfied with Accurate Reporting
In the last five years, we’ve seen more solar PV portfolios on the market, as the industry goes through periods of consolidation. As consequence, asset management has taken on new meaning beyond its relationship to O&M, and into the project lifecycle as a whole. We heard this at Solar Asset Management North America last March, as asset managers stressed the importance of having a feedback loop to various teams and stakeholders involved. Given the high turnover, rise of secondary markets, and greater influx of capital into the renewable energy market, investors are becoming more involved and are demanding more visibility into their investments. As expectations rise, there is a renewed emphasis on accurate reporting and it benefits to not only stakeholders but the company as a whole.
Mercatus explored this idea further and looked into the real benefits of satisfying investors and third-party stakeholders. The result is an average increase of 35 basis points. The more confidence that investors have in how plants are being managed and performing, which is demonstrated through accurate, detailed reporting, the more likely they are to award basis points. “The value of the opportunity in providing them with the data and information that they need through software in enormous,” said Haresh Patel.
In an industry where the competition is increasing and profit margins are squeezing tighter, companies need to focus on reducing their own costs and optimising resources. By fully digitising and streamlining the asset development and management process, with a fully integrated solution, market leaders are able to gain agility and scale they need to ultimately gain significant competitive advantage.