The Life of a Solar Project after the Dust Has Settled

The dust has settled. After a crazy whirlwind of activities, all project documentation has been signed just minutes before midnight. The solar project has been built despite all the roadblocks along the way. It is now operational and connected to the grid, just before any imposed deadlines. The press release has been issued. The sun is shining and PV plant is producing as planned and everything is fine. Time to relax and collect the cash flows for the next 20 or 25 years?

Dealing with the Dropbox Document Jungle

No time to relax for the developers, lawyers, investment officers, tax advisors and investment bankers. They have long moved on to the next shiny project and are out of the picture.

New teams have taken over. They have been given access to a document jungle in a Dropbox file and to a dozen of PV monitoring platforms. They are starting to receive emails and calls from a myriad of solar service partners and PPA off-takers.  And stakeholders start screaming that they want all sorts of reports. Time to relax?

This is part 1 in a series called “The life of a solar project after the dust has settled”.  Let’s get started dealing with the Dropbox document jungle.

We always like to ask solar investors and solar asset managers what tool they use to manage their project documentation. We receive answers all along the spectrum from physical document files, storage in a file folder architecture, storage on a local network, to cloud based storage in Dropbox, Sharepoint or storage on an online due diligence platform. Or a combination of some of the above. About 70 percent of the time Dropbox is included in the tools mentioned.  And respondents start to giggle because they believe this is not professional.

But it is not Dropbox as a document storage tool that makes an organisation professional or not. The real questions you need to ask are very often perceived as difficult ones. We have listed the 10 questions we believe a professional solar owner/operator should ask itself:

  1. Are you sure you have ALL important project documentation?
  2. Are the contracts fully executed by all contract parties?
  3. Are you able to find important contracts within seconds?
  4. Did somebody in the team read these contracts?
  5. Has the person who read the contracts really understood everything (“lawyerese” can sometimes be hard to understand)
  6. Has the person identified inconsistencies between documents, or things that just do not make sense and need to be amended?
  7. Has the most important information in the contract been extracted?
  8. Does this information live in somebody’s head or is it accessible to team members?
  9. Is the extracted pricing/cost information consistent with the financial models?
  10. Did anybody else in the team audit the extracted information?

Did you not get further than question 1? It is frightening for the solar industry, but you are actually in good company. About 80% of our respondents are not even sure they have everything they need.  As the industry matures, this will undoubtedly need to change quickly.  No time to relax, time to get started.

#rewpage#

Dealing with the Monster Consolidating Excel Spreadsheet

An important task of the solar asset manager is to monitor the overall performance of the PV generating asset. Often they have outsourced the live performance monitoring to a third party O&M provider. This O&M provider will typically send the PV asset manager monthly or weekly performance reports.

But PV asset managers increasingly want timely access to the performance data of their portfolio. And they want it at their fingertips. Sometimes they are frustrated with the time lag between actual generation and the outsourced reporting. But mostly they need timely data to produce their own internal management and financial reports.

In an ideal scenario, all PV installations in the PV asset manager’s portfolio are managed by the same PV monitoring system or by the same O&M service provider. PV portfolio owner/operators often start out with the best intentions to have performance measurement standardization of their asset portfolio.  But unless they control the entire value chain from development, to construction to ownership, this will be difficult to maintain: if a project or portfolio is offered to PV investors at an attractive rate of return, those standardization priorities often become secondary.

The PV asset manager will now need to log into the web portals of multiple PV monitoring systems to retrieve performance data. The complexity not only lies in maintaining different user names and passwords, but also in maintaining consistency with the definition of the performance parameters used by the different monitoring systems. Particularly with performance measurements for performance ratio and availability, they will observe a variety of definitions across different PV monitoring systems.

So what do PV asset managers do today to get timely access to consistent data across their entire portfolio?

Phase 1: Typically PV asset managers will initially choose the path of “lowest resistance:” This path that does not require any additional financial budget or senior management approvals. It will require an analyst to create a consolidating spreadsheet. The analyst will log into the different systems on a daily or weekly basis and download the raw data. Fresh out of business school, the analyst will load the spreadsheet with fancy macros to make adjustments to the data, the formatting and so on.  The spreadsheet will grow every day. Everybody is happy because the problem is solved. But either one of these scenarios happen. The spreadsheet has grown so big that one day it does not open any more. Or somehow it got corrupted and nobody knows exactly what happened to it, but the data can no longer be trusted. Or the analyst leaves the company and nobody quite understands the macros.

Phase 2: Invariably follows Phase 1. It often needs a crisis to obtain a financial budget. Some owner/operators will invest in creating their own database. The advantage is that they can set it up exactly as they want. But they need to have the necessary skill set in-house to deal with the various performance indicator definitions. And they will need to have skilled staff to maintain the database in the long run. An alternative way achieving automation is to work with an established PV monitoring aggregator, a company that has experience in dealing with data from other monitoring companies.

Whatever the choices are that PV asset managers make, they will need to bear in mind the main purpose of the consolidated data. They will need to ask themselves the question: “Do I need the data for live performance monitoring, for stakeholder reporting or for invoicing or for all of the above?”  There is little point in aggregating 5-minute data, if the live performance monitoring is outsourced to an O&M service provider. In such a case daily data is probably sufficient for daily performance management and reporting. 

It is going to be interesting to see which choices the solar asset management industry will adopt. But one thing is already clear: The days of the monster consolidating Excel spreadsheet are numbered.

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This article was originally published on 3megawatt and was republished with permission.

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Edmée Kelsey brings a wealth of solar asset management domain expertise to her role as founder and CEO of 3megawatt. 3megawatt provides software, methodology and support for solar portfolio managers and solar asset owners. 3megawatt's Bluepoint solar asset management platform is currently used to manage over 2 GW of operational solar assets worldwide. As former CFO of Main Street Power, a North American solar developer/operator, she closed project financing for over 100 of distributed solar PV projects and was responsible for the asset management of those solar assets. Before that Edmee was the CFO at Axiopower, a US based utility-scale solar developer, which has since been sold to SunEdison. Edmee has gained start-up experience as the founder and CEO of a European telecom service company backed by venture capital from 3i. She started her career as technology M&A investment banker at JP Morgan in London and New York. Edmee is fluent in English, French, German, Dutch, Italian and Spanish.

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