Asset Management Best Practice Guidelines (Version 2.0)

With the professionalisation and globalisation of solar investors and investment portfolios and service quality expectations rising steadily there are increasing requirements of Asset Managers. Expected to continuously improve the return on investment via various processes including revenue optimisation, cost reduction, financial restructuring, contractual renegotiation and technology adaptation, Asset Managers are relying increasingly on advanced digital platforms. The latter enable efficient and effective management of wide and diverse solar portfolios. The present Guidelines are intended for Asset Managers as well as for investors, asset owners, financers, software solutions providers, O&M contractors, technical consultants, and all stakeholders in Europe and beyond interested in improving solar Asset Management services.

This document starts by contextualising Asset Management, defining the roles and responsibilities of various stakeholders such as the Asset Manager, the Operations Service Provider and the Maintenance Provider and presenting an overview of technical and contractual terms to achieve a common understanding of the subject. It then walks the reader through the different business areas and other key activities of solar Asset Management, identifying for each segment “minimum requirements”, “best practices” and “recommendations”.

Lifecycle project management

Asset Managers can be involved in all phases of the solar power plant’s lifecycle: from development through Engineering, Procurement and Construction (EPC) and Operation and Maintenance (O&M) to decommissioning and disposal. The document focuses largely on Asset Management during the operational phase – the longest phase of the project lifecycle – but this chapter presents an overview of lifecycle Asset Management with roles and tasks in all project phases. Key competencies related to lifecycle Asset Management include stage-gate management, documentation management, lifecycle risk management and warranty management (in relation to the EPC warranty). Being involved along the lifecycle of the projects represents also a significant learning opportunity from a technical, contractual and financial perspective (feedback loop).

Risk management in the operational phase

This chapter focuses on the risks emerging from the commercial operation date (COD), under the operational phase. It defines the terms risk ("effect of uncertainty on objectives") and risk management (risk avoidance, risk reduction, risk control, risk transfer, residual risk) and gives an overview of financial, regulatory, contractual, technical, commercial and sector reputational risk factors.

Handover of solar assets

The journey of an Asset Manager starts with a handover (or on-boarding) process. This chapter addresses the importance of the handover process when an operational asset is transferred from an Asset Manager to another or when an asset owner decides to internalise the AM services. It presents the categories of site information and data to be handed over (such as real estate, power plant design and construction, production data, EPC and O&M contractor information), as well as the key documents to be collected and reviewed in the on-boarding process (such as the O&M manual, permits, contracts in place, warranties etc). It also underlines the importance of interoperability and compatibility between systems in case data needs to be migrated.

Technical Asset Management

Technical Asset Management (TAM) encompasses support activities to ensure the best operation of a solar power plant or a portfolio (i.e. to maximise energy production, minimise downtime and reduce costs). In many cases, the O&M contractor assumes some technical Asset Management tasks such as planning and reporting on Key Performance Indicators (KPIs) to the asset owner. However, in cases where the Technical Asset Manager and the O&M contractor are separate entities, close coordination and information sharing between the two is indispensable. TAM also includes ensuring that the operation of the PV plant complies with national and local regulations and contracts, and advising the asset owner on technical asset optimisation via, for instance, repowering investments.

Commercial and Financial Asset Management

Commercial and Financial Asset Management encompasses support activities for the best operation of a business, including accounting, cash flow management, contract management, equity/debt financing management, tax management, as well as liaising with key stakeholders such as investors and banks. Financial reporting is an important component of Commercial and Financial Asset Management and involves regularly providing the asset owner with financial statements, capital structure analyses, profitability analyses, cash flow and debt compliance overviews. Financial asset optimisation activities that should be performed by Asset Managers include cost reduction, financial restructuring and contractual renegotiation.

Procurement

Procurement involves identifying and selecting key suppliers involved in the operation of the solar businesses and solar power plants, such as O&M contractors, insurance and IT solutions providers, security service contractors and in some cases providers of ancillary services such as electricity, panel cleaning and vegetation control. The Asset Manager should identify the right trade-off between price, quality of services and key contractual terms and constantly balance them in line with market conditions. For example, in order to evaluate and select O&M contractors, Asset Managers are recommended to use SolarPower Europe’s O&M best practices checklist, which can be downloaded from www.solarbestpractices.com.

People and skills

It is important that all personnel from Asset Management companies have the relevant experience and qualifications necessary to perform the work in a safe, responsible and accountable manner. The annex of these  Guidelines contain a useful skills matrix  for technical, commercial and financial Asset Management.

Data management and high-level monitoring

Asset Managers should rely on a specialised Asset Management Platform to store, manage and, ideally, analyse technical and non-technical data and information collected from and relating to the solar asset, portfolio or SPV. Such a platform makes it possible for the solar industry to transition to an asset-centric information-based management approach, which addresses three key challenges: (1) loss of generation and income; (2) loss of time; and (3) lack of transparency, which is in contrast to the traditional linear Asset Management approach, where information flows from the asset through the O&M contractor to the Asset Manager and ultimately to the asset owner, with relatively little delving into the data and information extracted.

Key Performance Indicators

A close monitoring of Asset Management procedures is required to ensure implementation effectiveness. This can be achieved through the definition of clear and objective Key Performance Indicators (KPIs), which need to be continuously assessed. KPIs used to measure Asset Management service quality include Reports Compliance Rate, Invoicing Compliance Rate, Contracts Optimisation Rate, Requests Treated and Timely Response Rate. In general, one of the most important indicators is the track record of the Asset Manager.

Contractual Framework

The scope of a full-service Asset Management agreement corresponds to the structure of this document, with the main business areas being Technical, Commercial and Financial Asset Management, and procurement and lifecycle project management. Asset managers do not provide any contractual guarantees comparable to the “availability guarantee” provided by O&M contractors, however the Asset Manager is obliged to provide the services in accordance with all laws, authorisations, good industry practices and current market standards.