Asset Management Best Practice Guidelines (Version 2.0)
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02
Definitions
This chapter introduces a basic set of definitions of important terms that are widely used in solar Asset Management, of which all stakeholders should have a common understanding.
Although there are standards in place that explain some of this terminology, in practice, it is still difficult to agree on the boundaries of certain terms and what exactly is expected under these terms or services (e.g. technical Asset Management).
Rather than reaching a conclusive list for the field of Asset Management, the aim of this section is to provide a short, non-exhaustive collection of terms (alphabetically ordered) that reflects the content of this guide. Normative references such as ISO 55001:2014, SolarPower Europe’s Operation & Maintenance Best Practice Guidelines (Version 4.0), European Norm 13306, and PAS 55-1:2008 (3.9) were used as a basis.
| Advanced Data Analysis | The autonomous or semi-autonomous analysis of data using specifically developed algorithms and techniques which delve deeper than standard monitoring capabilities allow to discover deeper insights, make predictions and generate recommendations. |
| Asset portfolio | Group of assets that are governed by the same regulations and obligations. A portfolio is typically established and assigned for managerial control purposes and is usually defined by country, monitoring provider, O&M contractor or another category. |
| Asset Management | Asset Managers are responsible for the commercial and financial management of a solar investment and the supervision and control of technical activities. They manage a company or a portfolio rather than a power plant, often across different geographies, dealing with a variety of regulatory frameworks and business models. Asset management is also defined as the coordinated activities of an organisation to generate value from its assets (ISO 55000). |
| Asset Management Platform | A software package or suite of tools that is used by the Asset Manager to store and manage technical and non-technical data and information collected from and relating to the solar asset, portfolio or SPV. It combines the abilities of a Computerised Maintenance Management System (CMMS) and an Enterprise Resource Planning System (ERP). |
| Cash management | Managing treasury activities and monitoring the cash available in every period for a PV plant or an SPV. Examples of these activities are adjusting payments according to predicted income dates, assuring liquidity to comply with debt service schedule, making repayments of loans (interest and principal), and distributions to the SPV shareholders. |
| Computerised Maintenance | Management System (CMMS) A software designed to measure and record various O&M KPIs (e.g. Acknowledgement Time, Intervention Time, Reaction Time, Resolution Time) and equipment performance (e.g. Mean Time Between Failures) and thus optimise maintenance activities. |
| Contract management | Building, developing and maintaining business relationships with counterparties of different contracts. This includes selecting service providers, holding negotiations with banks, landowners and operations providers, managing insurance and warranty claims, as well as ensuring compliance of the contractual obligations, such as notifying, filing and reporting. |
| Corrective maintenance | Actions and techniques (immediate or deferred) taken to correct failures, breakdowns, malfunctions, anomalies or damages detected during inspections, or through monitoring, alarming, reporting or any other source. These measures typically generate follow-up work orders, which are formal requests assigned to an authorised person so that a job or task can be carried out. |
| Degradation | Decrease in the efficiency of a solar plant with the passage of time. Usually, at least 80% of the original output is expected within a 20-year period. |
| Development (Project Development) | Development is the phase that precedes the EPC phase in the lifecycle of the project. It usually includes the initiation of the project, site selection, customer identification, conducting preliminary studies, application for permits, securing the financing and selection of the EPC contractor. Project developers may own the project in the early development stages or even longer (Note that “development” is sometimes used in a way that includes “Engineering” and “Procurement” also, however in the terminology of these Guidelines this is not the case). |
| Digital Twin | A digital incarnation of the entire solar plant which delivers both the geospatial and electrical context of individual components and allows the recording and display of data and files against these components. |
| Documentation Management System (DMS) | A management system that records, manages and stores documents required for O&M and AM, such as technical plant and equipment documentation and drawings, maintenance manuals, photos and reports, including the various versions that are being created by different users, reviews and approvals. Documentation management system also defines a proper format and use (information exchange). Due to the increasing complexity of documents and in order to enable advanced analytics, electronic DMS with the ability to handle meta-tags and searchable, editable documentation is becoming a best practice. |
| Distribution System Operator (DSO) | Entity responsible for distributing the electricity from the transmission grid to end users (households/businesses) and maintaining the distribution networks. |
| Engineering, Procurement, and Construction (EPC) | EPC refers to companies that deal with the Engineering, Procurement, Construction and Commissioning of solar systems. The EPC contractor is in charge of delivering the full solar power plant to the asset owner from authorisation to commissioning and grid connection. For more information, see the EPC Best Practice Guidelines of SolarPower Europe (2020). |
| Environment, Health & Safety (EH&S) | EH&S indicates the policies and guidelines formulated to ensure environmental protection, occupational health, and safety at work and on site, applicable to staff and visitors according to European and national laws and regulations. |
| Event | An unplanned occurrence related to the SPV the PV plants it owns. The event can be a technical incident or an issue in business operations. Examples of events are component failures, vandalism, theft, grid outage, storm damage, and landscaping issues. |
| Feed-in tariff (FiT) | A policy mechanism (designed to accelerate investment in renewable energy technologies) which remunerates, through a long-term contract, a fixed electricity price to renewable energy producers for each unit of energy produced and injected into the electricity grid. |
| Final Acceptance Certificate (FAC) | The Provisional Acceptance is followed by a standard term of two years during which the EPC Contractor guarantees a minimum Performance Ratio (PR). At the end of this period, the Final Acceptance Certificate (FAC) is issued by the owner, which means that the PR measured over the two years has met the contractual obligations. After FAC, the owner takes over the full responsibility for the plant. |
| Generation forecasting | Estimation of the amount of energy a solar power plant will generate in the future in order to determine a project’s financial risk. Commonly used estimates are P50, P75 and P90. P50 is essentially a statistical level of confidence suggesting that we expect, with 50% probability, that the predicted amount of generation may be exceeded. |
| Good industry practice | Good industry practice means those practices, methods, techniques, standards, codes, specifications, acts, skills and equipment generally applicable in the international solar power industry (including construction and installation of solar power facilities) and followed or used by good contractors that, in the exercise of prudent, proper and good judgment, in light of the facts known or that reasonably should have been known at the time a decision was made or an action taken or omitted, would have been expected to accomplish the desired result in a manner consistent with applicable laws and permits, are reliable and safe, protect the environment, are economically efficient and are done with the degree of skill, diligence and prudence that would ordinarily be expected. Whereas “good industry practice” is a legal term often used in contracts, “best practice” is a term used in these Guidelines as defined in section 1.1. Rationale, aim and scope. |
| Irradiation | The solar radiation incident on a solar panel over time, relative to its area. It is usually expressed in watt-hours per m2. It plays an important role in the determination of the optimal inclination angle of PV modules and the profitability of a PV system. |
| Key Performance Indicators (KPIs) | Technical and financial parameters that help stakeholders to evaluate the operation and performance of an SPV and the PV plants the SPV owns. Solar KPIs include: Nameplate Capacity, Irradiation, Generation, Availability, Performance Ratio, Free Cash Flow and IRR. |
| Monitoring System | The digital platform used for the overall management of the PV plants or PV plant portfolio. It allows a centralized monitoring of the functioning, energy generation and reference data of the PV plant and its components. This is ideally performed through near-real-time monitoring module that retrieves data from the local SCADA systems. It also typically includes operational modules such as ticket dispatching, analytics and reporting. The monitoring operates 24 hours a day, all year, and is fed by in-plant data logging systems (or SCADA) as well as by irradiation and temperature measurements from particular sensors and other sources such as meteorological information. |
| Monitoring System | The digital platform used for the overall monitoring of the functioning, energy generation and reference data of the PV plant and its components, which is performed through real-time monitoring software. The monitoring operates 24 hours a day, all year, and is fed by in-plant data logging systems that collect data from different plants as well as by irradiation and temperature measurements from particular sensors and other sources such as meteorological information. |
| On-site consumption | The consumption of all or part of the energy from a PV plant at the same location where it is produced. If the energy is consumed by the person or entity that owns the PV plant, this is referred to as self-consumption or auto consumption. If the PV plant is owned by a different entity than the entity who consumes the energy, this is referred to as “third party ownership” and the consumption is typically governed by a PPA. |
| Operation and Maintenance (O&M) | O&M includes all the services that ensure maximum efficiency and maintenance for a PV plant. The services include monitoring and supervision; predictive, preventive and corrective maintenance; performance analysis and improvement; power generation forecasting and site security management. |
| Operating expenses | Operating expenses for a PV plant include rent, insurance, security, O&M service, Asset Management service, PV monitoring, utility fees, and bank fees. |
| Power Purchase Agreement (PPA) | Contract of electricity supply between a party generating and selling electricity, and a party purchasing electricity. The PPA defines the conditions of the agreement, such as the amount of electricity to be supplied, point of interconnection, applicable rate schedule, production guarantees and penalties for non-compliance. |
| Preventive Maintenance | Actions, testing or measurements to ensure optimal operating conditions of equipment and of the entire PV plant, hereby preventing defects and failures. Preventive maintenance takes place periodically, and according to a specific maintenance plan and maintenance schedules. |
| Project financing | PV projects are often financed by a combination of equity and debt. Loan agreements for project finance will rely on the project’s cash flows for the repayment of principal and interest. The project's assets and asset rights are held as collateral by the financing institution. |
| Provisional Acceptance Certificate (PAC) | The Provisional Acceptance Certificate (PAC) is issued at end of the construction works after a short period of Performance Ratio (PR) test period and means that the PR meets the contractual obligations. Through the PAC, the Asset Owner gives conditional acceptance of the works, pending confirmation of the PV plant performance which needs to be proven, within a standard 2 year warranty period that starts with Provisional Acceptance. |
| PV Power Plant | An independent electricity generating entity (PV panels and Balance of System), which possesses its own set of operational and financial contracts. |
| Regulatory and statutory compliance | Compliance to any law, statute, directive, regulation, policy or rule issued by a competent public authority: either by the government (statutory) or by a regulatory agency (regulatory). The compliance is applicable in the country or in the corresponding administrative unit where the SPV and PV plant is based and/or where services are provided. |
| Reporting | Regular deliverables to various project stakeholders (investors, banks or management), detailing operational and financial performance of an asset portfolio, SP or individual PV plant, Reports usually include KPIs in graphical and tabular form, comparison of the KPIs against forecast, events, risks and a narrative detailing performance for the period. |
| Revenue Management | Set of practices and activities aimed at maximising the revenue from PV plant operations. This includes electricity invoicing, verifying settlements, day-ahead or intra-day generation forecasting, sale of certificates, efficient incident resolution and receivable management.. |
| Risk | Risk is defined as the “effect of uncertainty on objectives”. The major categories of PV risks include, but are not limited to financial risks, country and regulatory risks, contractual risks, commercial risks, technical risks and reputational risk. |
| Risk management | The practice of identifying and analysing the risks to which solar power systems and operations are subjected and taking steps to mitigate them. The different risk management methods are risk avoidance, risk reduction, risk control, risk transfer. The risk that cannot be mitigated is called residual risk. |
| Spare parts management | Activities that ensure the availability of the right amount and type of components, equipment, and parts, either on site or in warehouses or in O&M service provider’s stocks, for prompt replacement in order to minimise the downtime of a PV plant. |
| Special Purpose Vehicle (SPV) | A company with its own rights, assets and liabilities, created for building, owning and operating one or more solar power plants. The SPV is also referred to as SPE (special purpose entity) or as a project company. |
| Supervisory Control and Data Acquisition (SCADA) | Supervisory Control and Data Acquisition (SCADA) is a data acquisition system that connects various hardware and software components in a given site and is used to monitor and control the solar power plant remotely. SCADA systems are typically employed to send data to a centralised Monitoring System for monitoring and analytical purposes (see definition for “Monitoring System"). |
| Technical Asset Management | Technical Asset Management includes monitoring the production and status of a number of PV assets, visiting PV plants to conduct field-based assessments, working with O&M contractors, and producing performance reports to internal and external stakeholders, as well as preparing any documentation needed for public and governing bodies. |
| Transmission System Operator (TSO) | Entity responsible for controlling and operating the transmission grid, which usually comprises the voltage levels of 220 kV and 380 kV in Europe. The operations include monitoring and controlling the current grid topology (position of breakers and switches within the grid), as well as the voltage, in all parts of the transmission grid. Any planned PV plant outages need to be communicated to the TSO. |