Asset Management, Solar, Utility Scale

Demystifying bank solar asset management with U.S. Bank, Wells Fargo, and kWh Analytics

Bank asset management is known to be an opaque subject. Thankfully, Diana Weis and Sarah Disch, each co-heads of the Solar Asset Management groups at their organizations, U.S. Bank and Wells Fargo Bank respectively, shared their expertise with me at SAMNA 2019. They each have over a decade of experience in solar finance. Here are three key takeaways bank asset management experts Weis and Disch shared:

1) Bank Asset Management is “Heavily Compliance-Focused”  

Though both developers/project owners and financial institutions have employees in “Asset Management,” the respective functions are distinct. 

For a project owner or developer, an asset manager’s main job function is to ensure the assets are operating optimally. The asset managers are often externally facing, working with the PPA offtakers, financiers and external O&M counterparties; handling insurance claims; and managing any other external stakeholders.  

At a bank, however, a lot of the asset manager’s job responsibilities are focused on managing internal stakeholders. Not only is senior management of the solar team interested in asset health, but also groups ancillary to the renewables group who need information for their job function. 

“A majority of my role is not facing externally to the sponsor [the developer or system owner],” Sarah Disch explained. “It’s actually facing internally within the bank — for example, working with our accounting and finance teams, managing bank regulatory and finance requirements, or seeking approvals on communications. It’s heavily compliance-focused.” 

For banks, asset management groups often help ensure the accounting books are in order, make sure the bank is complying with regulatory items like Anti-Money Laundering and Bank Secrecy Act laws, work with internal credit teams to enact asset downgrades when appropriate, and manage the process with internal auditors that come through every 12 to 18 months to ensure that the group is abiding by their own internal processes and protocols. 

Diana Weis described her job as “being the spoke of a wheel” and project managing the solar project through the life of the investment, making sure everyone is informed about its health and fielding any internal questions that arise.

2) It’s All About the Data

Given this emphasis on compliance, even when assets are performing as expected, there is an entire ecosystem of stakeholders looking for data on how the fleet is performing. It is common practice for quarterly and annual reports to be generated and communicated internally, covering everything from the operating health of the assets to credit evaluations of the various vendors and counterparties in the deal. “It’s critical for us to get reports in a timely manner, because it’s a blocker for us to do our month-end reporting and close our books,” Disch noted. 

Both panelists agreed that they evaluate actual production as compared to projected production, and that underperforming assets can be a cause for concern. They track performance closely, in part because of reporting requirements, but also due to the fact that they may have syndicated the deal to another tax equity investor or have part of their return reliant on the value of the asset at some future date.

They also agreed that asset management is a critical function within their organizations and they are often looked to as the experts on the portfolio. 

Since the sponsors are actively managing the assets, at the end of the day, they will be the best informed to know what’s happening at the site. Weis probably summarized it best when she said that “a communicative sponsor is the best possible sponsor.” 

3) The Future of Bank Asset Management

Due to the lack of consistency in solar data formats around the industry, tracking this data can be a challenge. As a result, leading investors have secured external tools to complement their strengths. 

“Many of our challenges are in getting our data to be consistent for our internal tracking, which is exacerbated by the fact that we work with so many different developer partners,” Weis commented. “In addition to independent engineers and lawyers, we rely on specialty tools such as the kWh Analytics HelioStats risk management platform to organize our data and measure our risk, which adds significant operating leverage to our team.” 

These systems consolidate data into dashboards for ease of managing the various internal requirements and requests that these asset management teams face.

There are other key efforts to help with data consistency, including the Department of Energy’s Orange Button Initiative, which offers open source data standards for the industry. Across geographies and foci of institutional investment, standardizing data allows for a reduction in soft costs — making it easier to share solar data and speed up processes, like financing.