Typically referring to the system operation and maintenance of assets over their life cycle in order to realize their value, solar asset management involves both physical and intangible assets. While physical assets include solar equipment and components, intangible assets consist of cash and securities.
While solar asset management, together with its technical, commercial, and financial aspects, entails maintaining the physical equipment and components of a power generating site and the generation and sale of energy, the end objective is to ensure optimal financial performance.
Technical solar asset management involves monitoring and reporting the real-time and estimated power generation performance of the project. It follows a holistic approach to know how much energy a project should generate for a particular period, keeping into account factors like weather and degradation of assets. The idea is to ensure that generation targets are met.
Operations and maintenance basically refer to the labor involved in physically maintaining the site. Commercial solar asset management, on the other hand, demands tracking costs/warranties and complying with regulatory requirements to qualify for benefits like solar investment tax credit and renewable energy certificates. The financial aspect of managing solar assets also equally important. It requires managing the entire portfolio to ensure that the investment is meeting targets relating to net present value and internal rate of return through an entire gamut of functions like invoicing, tax assessment, insurance administration, and equity management.
The growing importance of solar asset management in the current business framework cannot be overemphasized. Not only does it lower the Levelized Cost of electricity, aid preventive maintenance, and enhance power generation, it also helps mitigate risks, improve financial performance and ensure adherence to compliances and regulations to avoid legal implications.
To meet the growing demand for managing solar assets, many top solar companies in India have now adopted technologically advanced systems like asset management software and cloud-based asset management platforms to make the task easier and more efficient. The business opportunities in this domain are growing by leaps and bounds in view of the rapid transition towards the clean energy ecosystem, which has resulted in higher growth and increasing price competitiveness.
The focus on larger portfolios has brought the focus on solar asset management like never before to reap maximum benefits out of the advantages of economies of scale through more efficient operations. The solar industry is, therefore, turning to third-party asset managers like never before.
Given the intense competition and growing demand that have led to low pricing, asset management services are likely to get only cheaper. With developers now looking to optimize their returns and increase the longevity of their plants, asset managers now have their task cut out in deploying resources, skills, and strategies to the best of their abilities with a focus on advanced digital asset management platforms.
The expectations are high and the opportunities aplenty. Given the high stakes, it is clearly a case of survival of the fittest. But for solar asset managers who live up to their billing, the sky is clearly the limit in this sunshine industry.