Mirroring the increasing specialization within the solar PV market, the GTM reports covering operations, maintenance (O&M and asset management (AM) are evolving as well. Previously these global reports, created by one of the industry’s leading analysts, Cedric Brehaut of SOLICHAMBA, were published as one study. This month Cedric and his team have split out solar PV asset management, giving O&M and AM separate due.
To get an insider’s view of this new report, called “Solar PV Asset Management, 2017 to 2022,” and the trends it reveals, Solar O&M Insider talked with Cedric Brehaut and Laks Sampath of Alectris. For the full discussion listen to the podcast or reference the transcript here.
Rationale to Separate O&M and AM Reports
“The decision to separate it out was because I am convinced that these are distinct markets with distinct dynamics and market players,” explained Brehaut. “In the beginning, it was part of the analysis with O&M and over the years, the O&M report evolved to being called O&M and asset management because gradually, I included a little bit more and more of asset management. But as I came to understand the asset management landscape better and to dive deeper into its analysis, it became clear that it needed its own report instead of one 300-page report that would take six months to write and it would be almost outdated by the time it would be published.”
What is Solar PV Asset Management?
The terminology related to this part of the solar PV industry continues to be in flux. Standardization efforts in several parts of the globe are working to bring clarity to the industry’s vernacular. Industry analysts like Cedric and the GTM team promote terminology standardization as well.
These definitions emerged from this conversation:
Asset Management: “Asset management is the scope that is assigned to an asset manager as opposed to an O&M manager. And in most cases, at least for large plants, an asset manager does some oversight on O&M activities but does not manage the execution of O&M activities. The asset manager is in charge of all the aspects from financial, commercial, legal and technical and usually they do the financial, commercial and legal aspects but on the technical sides, it’s more of an oversight function to make sure that the O&M is done properly and that performance is optimized,” explained Brehaut.
Financial versus Technical Asset Management: “I view asset management as being two pieces. The financial and legal side and technical asset management. For me, the technical consists of actually managing the plant which is the hard assets including panels/modules, substation, inverters, transformers, etc.,” said Sampath.
Four Trends Shaping the Solar Investment Community
The SOLICHAMBA / GTM Research report reviewed data from 198 investors globally. Four trends emerging from this study were shared by Brehaut on the podcast discussion.
These trends from the solar investment community impacting asset management include:
- Geographic diversification of portfolios
- Energy trading
- Convergence with wind
- Process automation
Growing Geographic Diversification of Solar Portfolios
Brehaut explained: “It may not be as apparent in the US but it is definitely a strong trend from a global perspective. We’re moving from investors that are focused on one country to investors and portfolios that are covering multiple countries. Clearly, multiple countries within Europe but also multiple countries across continents including Europe and then potentially Asia or Latin America. We’re really transitioning from a country specific investment landscape to a more geographically diverse set of portfolios.
This has an impact on the entire value chain because these portfolios need to be serviced and now investors want to have one or a small number of providers on the asset management side and on the O&M side potentially across their portfolios as opposed to just having one set of vendors per country.”
Solar Energy Trading
“More solar projects globally are in wholesale markets,” explained Brehaut. “This brings another set of challenges. It may not make much difference from an O&M standpoint although you have to now do a better job at scheduling your power, forecasting it, and you have to make even more efforts to reduce unplanned outages. But the bigger difference is on the business side: you’re now selling energy on wholesale markets which is commercially and financially completely different from having a straight PPA or a Feed-in tariff.”
Solar Convergence with Wind
A recent piece by Brehaut in Greentech Media underscores this convergence he discussed on the podcast, called Are Solar and Wind Asset Management Converging? “It’s the fact that many investors own both wind and solar assets. From an O&M perspective, there are many differences in these technologies, so we still see distinct vendor landscapes on the O&M side. However, from an asset management perspective, wind and solar are not that different. I think we can expect the convergence of the investors to translate also into the convergence of the asset management service providers,” added Brehaut.
Price pressure across the value chain is driving the demand for more efficiency. To derive operations, maintenance and asset management efficiencies, companies are using software to automate these processes.
Key Findings of Solar Asset Management Software Review
The “Solar PV Asset Management, 2017 to 2022” analysis covered 10 software vendors with solutions that were applicable to 12.5 gigawatts including the Alectris Solar ERP software platform called ACTIS.
Some of the key findings of the solar asset management software review included:
- Adoption rates of solar asset management software are low
- Software flexibility is “super important”
- Integration with other platforms is key
Adoption Rates of Solar Asset Management Software are Low
Said Brehaut, “We can pat ourselves on the back and think, ‘Twelve and a half gigawatts of software.’ Yes, but it’s 12.5 gigawatts and for the top 198 investors that I analyzed, they manage 55 gigawatts. The overall total install base across segments globally of solar PV is 300 gigawatts. There’s still a long way to go for asset management software adoption.”
Solar Asset Management Software Flexibility is “Super Important”
“There’s no such thing as standard processes for asset management so a software has to be flexible to adapt to pretty much any variation of processes that a particular customer may have,” explains Brehaut. “That is tough because at the same time you want something that’s easy to use and to deploy. It’s very hard to reconcile these two characteristics of a software package having at the same time something that’s going to be super flexible to do pretty much anything any way the customer wants it and at the same time, be fast to deploy, cost effective and easy to use. I think that’s the conundrum that software companies have to work with and it adds to the challenge.”
Integration with Other Platforms is Key
In the diagram above, provided by SOLICHAMBA and GTM Research, the attributes of the software solutions are provided are detailed. This diagram also shows the other types of systems the software must integrate with on some level.
“When you look at the diagram, it highlights the fact that asset management software is in the middle of an ecosystem of many different pieces of software. Even the scope of asset management software itself can be defined in different ways. It’s a world of integration, and software solutions that evolve in this environment have to take that into account,” explained Brehaut.
ACTIS Fulfills Investor Requirements
Sampath comments, “It was nice to see that a platform like ACTIS actually fulfills several of the investor requirements outlined in the study. These include integration, geographic dispersion and the ability to manage wind and solar assets from one platform.
The problem right now is one of siloes. Monitoring is done on one platform. You could have a portfolio of five different monitoring platforms for a given portfolio. You could have SAP or QuickBooks as your financial back end. Service Max might be your service ticket management system. The key question is, are these all integrated? How do you export information from the production numbers or the alerts that you get from monitoring companies to a Service Max and then onto the overall report for financial asset management?
You need all of these pieces integrated together. When you talk about process automation, integration is key. A platform like ACTIS is actually built on Microsoft Dynamics CRM which essentially means anything that Microsoft Dynamics CRM can integrate with, we can integrate with. We have APIs through which we can collect the data. We can create the trouble tickets. We can manage all of those pieces. We can manage the boots on the ground. So that part of the integration has already happened.
The other piece you talked about earlier in emerging trends has to do with geographic differences as well as wind. If you take the geographic part of it, this software is developed in Europe and so we’re already across the pond.
As far as wind goes, we are in discussions right now to integrate wind into our portfolio because there are some new wind players.
Trading is something we have to kind of look into to see what needs to happen there. And when we do that, you’ll suddenly have a fully integrated software which from a technical asset management side we actually do the financial side as well,” concluded Sampath.
Excel, a Blessing and a Curse
A final note in these insights into the new “Solar PV Asset Management, 2017 to 2022” report. Listen to the podcast or read the transcript to learn about all the challenges Brehaut and Sampath discussed relating to solar asset management adoption.
One conversation item was very animated and it was on the entrenched use of Excel in the industry. When you see less than 10% of the global solar PV assets, according to SOLICHAMBA, are managed by solar asset management software, you start to get an idea of the quandary.
Two years ago Alectris conducted a webinar with Solar Power World magazine called, Four Big Problems with Solar PV Data. With participants from around the world sounding in we discovered 59% of the industry was using spreadsheets to develop asset reports and 53% of them had no idea how much time was spent by their teams on such reports. It seems not too much has changed!
Brehaut paints the picture of how this dependence on Excel gets started, “For one plant you can start doing things in Excel. Then you add a second one and you’re like, ‘Okay, I can change it. I can make it work.’ Little by little, it becomes more and more painful and more complicated and at some point you outgrow Excel but you’re used to it. There’s an inertia and a challenge in having people switch over and Excel is virtually free. It becomes sometimes difficult for software providers to go out there and say, ‘Hey, you can save money, you can be more efficient but here you need to pay for software.’ People look at you and it’s like, ‘What? Your software is expensive.’ It is a bit difficult because asset management software providers have to sell an ROI to people who may not know exactly how much they’re spending in labor.”
The problems with Excel are not limited to increasingly complex portfolios and geographically spread out teams where spreadsheets live on somebody’s desktop. They are not Cloud based. They’re not transparent to the rest of the team. Ownership of the plants are at risk of their data and that information not being available to them should something happen to a team member who’s holding the data.
Brehaut expounded, “Even if you’ve done things right and have Cloud backup and the files are still there, I don’t know if you have personally experienced trying to understand a complex Excel file created by someone else. I have. I wouldn’t say it’s impossible but in most cases, what you’re going to have happen is the new person is probably going to redo their own thing in Excel again. You have an incredible waste of time and expertise every time you get a new person.”
He went on to tackle a longer-term HR issue, “It’s unlikely an asset manager will stay 10 years or 20 years on the job. They will move on just like people do. And so, every time a new person gets on board, Excel is a liability and creates a high cost of transition and creates a risk of things falling through the cracks during that transition period, too.”