You are about to purchase a portfolio of operating assets. What strategy should you employ to best manage these projects?
Acquiring assets or expanding your portfolio is a daunting task on it’s own as you go through the necessary due diligence to determine risk factors, project valuation and your expected IRR. What follows is also as challenging but rewarding if done right. Managing assets for the short or long term requires three essential investments as a portfolio owner.
1: Asset Manager
We are pointing out the obvious here but you might be surprised to find out that some portfolio owners do not have an active asset manager to oversee their assets. Sometimes they rely on the O&M provider to keep the lights on with no oversight. Your asset manager should have extensive experience with managing both the technical & financial components of your operating assets. Most importantly, he/she is responsible for assessing the modeled vs. weather adjusted vs. actual performance data of the portfolio, project, yield optimization and portfolio reporting and the coordination of financial, commercial and administrative tasks. This person should, ideally, work closely with your accounting team.
2: O&M Provider
Assuming you do not have an internal unit capable of providing these services in-house, an effective O&M provider with experience in your region and with your equipment manufacturers is extremely important. They should have either response time guarantees or availability guarantees and have the necessary spares stocked in their inventory.
As O&M providers come in all shapes and sizes globally, for most projects, choosing a provider depends more on your relationship and level of trust between companies. For large projects, the choices are less diverse as the stakes are much higher in terms of meeting federal and state level regulatory compliance requirements. The largest national providers dominate this space as they have more resources to manage a heavier workload and have the experience to avoid costly fines.
3: Management System
Managing assets on excel is just not a feasible solution anymore for a growing and evolving industry. You need a robust software system that covers the following components. Selecting the right software partner from the start that is the right fit with is equally as important. Take into account total cost of ownership, robustness of their platform and the people you are going to work with before pulling the trigger. Below are the top components to consider.
You may end up with projects that have different monitoring solutions. Managing them across 4 or 5 portals is not efficient and becomes cumbersome when building your monthly and annual project reports. You need to have a solution that consolidates performance tracking into one robust monitoring dashboard and displays your devices, channels, alarms and KPI’s in a standard manner.
All documentation such as permits, legal, pvsyst files archived for each project need to be centralized and accessible with a few key strokes.
A place to store your PPA, O&M, utility contracts and apply the terms of those contracts to actionable items, ensuring that you are fulfilling your obligations. The system should be able to ensure that if performance crosses certain thresholds, alarms are triggered and tasks are assigned to the appropriate parties.
A solution that aggregates data across multiple projects. For example: the expected vs. actual revenue or generation numbers, or reporting to include open events and activities across your fleet. The solution should give you full oversight of your portfolio through all development stages and display financial and technical key performance indicators and trends on a dashboard.
Invoicing in an automated fashion that utilizes data from your contracts and actual generation numbers without relying on outdated methods prone to human error. A system that can then synchronize with your accounting software and connects your real time generation with your contracts and documents.
Connecting the dots between your operations team and your accounting team. Your GL, budget, P&L and cash flow should be in sync so that your consolidated reporting is accurate and transparent.
Automated report scheduling will save your team time and effort especially when all information is consolidated in one platform. Having accessible information for your partners or investors through a portal login is also highly valuable both as a time saving mechanism and as a contributor to transparency and accountability.
These three components won’t guarantee company success at every level but investing in a proven asset manager, O&M provider and asset management software will provide greater oversight to your assets. As more and more companies try to expand their reach to meet the demands of a growing industry, these internal investments are and will continue to be critical elements of operating a successful portfolio.
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